Natwest interest only

330d

Hi, I am looking at getting a interest only mortgage with Natwest. I have seen there criteria which is fine - https://personal.natwest.com/personal/mortgages/mortgage-types-and-rates/interest-only-mortgage.html#caniget

The house I am looking at is £350k and I will be putting down a £110k deposit. But the broker I am using has said the new house must have £200k equity. Is this correct, I have phoned Natwest who said no.

But it does mention it on the Natwest Intermediary site - http://www.intermediary.natwest.com/intermediary-solutions/lending-criteria.html (go to interest only)

Where the sale of main residential property is the Repayment Strategy (RS) the following applies:

 

• Where the entire mortgage is on IO the property must have a minimum equity of £200,000
• Where there is an element of IO and Capital & Interest (C&I) the underwriter must be satisfied there is a minimum of £200,000 equity at end of term when C&I element has been repaid.

So my question is, the eligibility criteria different when going direct vs using a broker?

Thrugelmir

All depends on the underwriter's decision at the time of application. 

330d

Thrugelmir said:

All depends on the underwriter's decision at the time of application. 

But surely the eligibility criteria shouldn't change depending on the underwriter? Should it not be a standard set of requiremens?

Thrugelmir

Applications differ though, with varying degrees of LTV, mortgage term, type of property etc. Hence the second criteria being broad in nature. One size doesn't fit all.
Interest only is now only a small part of the new business market. With lower volume there'll be an increased focus on a case by case basis. 

330d

The criteria that I originally posted, I am not 100% sure on what they mean so would appreicate if we could clarify it please.

Where the sale of main residential property is the Repayment Strategy (RS) the following applies:

 

• Where the entire mortgage is on IO the property must have a minimum equity of £200,000
• Where there is an element of IO and Capital & Interest (C&I) the underwriter must be satisfied there is a minimum of £200,000 equity at end of term when C&I element has been repaid.

The 1st bullet point, is it referring to the house I am buying or the 2nd house I have that is the repayment plan? Were does the £200k equity need to be?

Thrugelmir

Where there is an element of IO and Capital & Interest (C&I) the underwriter must be satisfied there is a minimum of £200,000 equity at end of term when C&I element has been repaid.

In your particular instance there's £90k of equity that needs to be found. 

330d

Thrugelmir said:

Where there is an element of IO and Capital & Interest (C&I) the underwriter must be satisfied there is a minimum of £200,000 equity at end of term when C&I element has been repaid.

In your particular instance there's £90k of equity that needs to be found. 

Yes, but thats at the end of the term as mentioned? Not right now?
And the 2nd house I have which is the repayment schedule as a large equity, much more than £90k.

Thrugelmir

Hence my earlier comment about applications been underwritten on a case by case basis. Too many variables to have set criteria at the outset. The one certainty at the end of the term is that the lender will wish to ensure that there's sufficient equity left to cover the debt owed. 

amnblog

Your Broker is not referring to your ability to take interest only lending - you can subject to further criteria.
Hence the interest only page on the customer facing website says:
Your repayment plan needs to be approved by us
It is the 'repayment plan' your broker is referring to. If your plan to repay the capital is sale of the property, you need to put down £200,000 so that there is £200,000 equity once the loan is in place.
So in this case, your cannot have interest only with Nat West, and I imagine any other Lender (as they all have similar rules on equity) if sale of property is your intended capital repayment plan.
I would question why you need interest only in any case - sounds like an idea you should drop.

330d

amnblog said:

Your Broker is not referring to your ability to take interest only lending - you can subject to further criteria.
Hence the interest only page on the customer facing website says:
Your repayment plan needs to be approved by us
It is the 'repayment plan' your broker is referring to. If your plan to repay the capital is sale of the property, you need to put down £200,000 so that there is £200,000 equity once the loan is in place.
So in this case, your cannot have interest only with Nat West, and I imagine any other Lender (as they all have similar rules on equity) if sale of property is your intended capital repayment plan.
I would question why you need interest only in any case - sounds like an idea you should drop.

But I am planning on putting £200k down. My thoughts were £110k deposit and £90k equity from the 2nd home. 
Forgive me for all the confusing questions  

TrickyDicky101

330d said:

amnblog said:

Your Broker is not referring to your ability to take interest only lending - you can subject to further criteria.
Hence the interest only page on the customer facing website says:
Your repayment plan needs to be approved by us
It is the 'repayment plan' your broker is referring to. If your plan to repay the capital is sale of the property, you need to put down £200,000 so that there is £200,000 equity once the loan is in place.
So in this case, your cannot have interest only with Nat West, and I imagine any other Lender (as they all have similar rules on equity) if sale of property is your intended capital repayment plan.
I would question why you need interest only in any case - sounds like an idea you should drop.

But I am planning on putting £200k down. My thoughts were £110k deposit and £90k equity from the 2nd home. 
Forgive me for all the confusing questions  

That's a £200k deposit - but where are you sourcing the cash (equity) from that is contained within this 2nd home?  Are you taking additional borrowing on it, for example?