Interest Only Mortgage

Luscious007

I took out an interest only mortgage in August 2022 with a partner I have had this mortgage for almost 22 years on my own prior to this.  I have just called the mortgage lender to ask if I was able to port this product on my own to another property.  The answer was yes but I would need to fulfil their criteria.  Criteria number one was do I earn 75k per annum - ermmm no but neither did we in August when we jointly took this mortgage out !!  I fulfil all other criteria and am even placing a healthy 70% cash deposit down.  How can this be right when I am trying to remove myself from a bad situation to find that the interest only mortgage I am paying currently of £320 divided by two will increase to approx £700/800 per month for me alone !!! How do they set these criteria and why?  I tried to explain to the advisor that this seemed nonsense given you will allow me to take out a repayment mortgage on a much higher monthly repayment than give me an interest only mortgage given the equity in the property would cover the amount borrowed twice over! Can anyone suggest a way around thi please.  

housebuyer143

Lenders set there criteria for various reasons. Interest only is hard to get on a residential property because many people took them out a few decades ago and found themselves in a lot of trouble when their terms ended and they hadn't paid off any of the capital I could not afford to pay back the loan. Hence why interest only is very hard to get.

You might have qualified for the lenders criteria in August. However, if they've changed their criteria, there's nothing you can do.

Repayment mortgages a much less risky which is why they are going to offer you a repayment mortgage rather than interest only even though the payments are higher.

There are some lenders who do not require income for interest only. Have you considered moving to them?

K_S

@luscious007 Hopefully I've understood your post correctly -

- In Aug 2022 you qualified for an I/O mortgage with your partner as a joint borrower

- You're now looking to port the mortgage in your sole name but unable to meet the I/O criteria on your sole income

I doubt the criteria has changed since August, it's probably just the move to a single income that's caused the issue.

Luscious007 said:

I took out an interest only mortgage in August 2022 with a partner I have had this mortgage for almost 22 years on my own prior to this.  I have just called the mortgage lender to ask if I was able to port this product on my own to another property.  The answer was yes but I would need to fulfil their criteria.  Criteria number one was do I earn 75k per annum - ermmm no but neither did we in August when we jointly took this mortgage out !!  I fulfil all other criteria and am even placing a healthy 70% cash deposit down.  How can this be right when I am trying to remove myself from a bad situation to find that the interest only mortgage I am paying currently of £320 divided by two will increase to approx £700/800 per month for me alone !!! How do they set these criteria and why?  I tried to explain to the advisor that this seemed nonsense given you will allow me to take out a repayment mortgage on a much higher monthly repayment than give me an interest only mortgage given the equity in the property would cover the amount borrowed twice over! Can anyone suggest a way around thi please.  

dunstonh

 Criteria number one was do I earn 75k per annum - ermmm no but neither did we in August when we jointly took this mortgage out !! 

Lending criteria is not static.  It tends to tighten as the economy gets worse and loosen when it gets better.

There may also be internal rule changes or business decisions. e.g.   a lender may decide it doesnt want to do interest only mortgages any more unless its for a higher earner.

Lending criteria can also vary with different distribution channels.  

 I tried to explain to the advisor that this seemed nonsense given you will allow me to take out a repayment mortgage on a much higher monthly repayment than give me an interest only mortgage given the equity in the property would cover the amount borrowed twice over!

Are you sure it was an adviser?  An adviser would be able to explain the reasons.  Whereas a clerk wouldn't likely know.

Martisha

I read somewhere that Nationwide is reducing some of their fixed products, is this true?

K_S

Martisha said:

I read somewhere that Nationwide is reducing some of their fixed products, is this true?

@martisha Yes from tomorrow. See here for details 

Martisha

K_S said:

Martisha said:

I read somewhere that Nationwide is reducing some of their fixed products, is this true?

@martisha Yes from tomorrow. See here for details 

Thank you

we received mortgage offer yesterday, is there any chance we can switch product to the cheaper rate please?

K_S

Martisha said:

K_S said:

Martisha said:

I read somewhere that Nationwide is reducing some of their fixed products, is this true?

@martisha Yes from tomorrow. See here for details 

Thank you

we received mortgage offer yesterday, is there any chance we can switch product to the cheaper rate please?

@martisha Yes, it's a fairly straightforward process for your broker. I'm assuming it's similarly easy if direct.