Interest Only Mortgages and age restrictions.

DE_612183

I was wondering if anyone can help with this at all and advise if this is a general rule?

I've just gone through a new product selection at the end of a fixed rate, I've gone onto a tracker as that doesn't have any penalties as I'm going to be moving in the next 6 months anyway.

As part of the discussion I asked about an interest only mortgage to be told that at my age I couldn't have one - I couldn't understand the logic with  this as surely whatever plan you have to pay off the capital is the same whatever age you are?

This is with Nationwide.
I'm 62
Planning to pay off the capital when downsizing in the future & probably part of lump sum from pensions.

DullGreyGuy

From my limited experience you need a viable plan to repay the mortgage in full within the timescale of the mortgage and "selling the property" is not normally accepted as the mechanism. Haven't heard of a direct age restriction but they may consider the viability of your plan with the typical reduction of income on retirement. 

Hoenir

Looking at Nationwide's interest only mortgage criteria. These factors stand out, 

• Income: Minimum basic income of £75,000 for sole applicants and £100,000 for joint applicants. 
• Equity: Minimum equity requirements vary by region. For example, properties in Greater London require £300,000, £250,000 in the South East, and £200,000 for other UK regions. 
• Mortgage Term: Maximum term of 25 years or retirement age, if earlier. 
• Repayment Strategy: A clear repayment strategy is required to repay the capital at the end of the mortgage term. 

la531983

Unpopular opinion maybe - interest only mortgages should only be allowed on buy to let properties. The number of threads Ive seen on here about people suddenly surprised the term has ended and they have to pay the mortgage off, with absolutely no plan in place to do so.

DE_612183

Hoenir said:

Looking at Nationwide's interest only mortgage criteria. These factors stand out, 

• Income: Minimum basic income of £75,000 for sole applicants and £100,000 for joint applicants. 
• Equity: Minimum equity requirements vary by region. For example, properties in Greater London require £300,000, £250,000 in the South East, and £200,000 for other UK regions. 
• Mortgage Term: Maximum term of 25 years or retirement age, if earlier. 
• Repayment Strategy: A clear repayment strategy is required to repay the capital at the end of the mortgage term. 

Ah, thanks for that - during retirement the £100k would be the blocker rather than anything else.

Are all banks & BS the same?

DullGreyGuy

DE_612183 said:

Hoenir said:

Looking at Nationwide's interest only mortgage criteria. These factors stand out, 

• Income: Minimum basic income of £75,000 for sole applicants and £100,000 for joint applicants. 
• Equity: Minimum equity requirements vary by region. For example, properties in Greater London require £300,000, £250,000 in the South East, and £200,000 for other UK regions. 
• Mortgage Term: Maximum term of 25 years or retirement age, if earlier. 
• Repayment Strategy: A clear repayment strategy is required to repay the capital at the end of the mortgage term. 

Ah, thanks for that - during retirement the £100k would be the blocker rather than anything else.

Are all banks & BS the same?

No, Halifax will consider going on beyond retirement as long as you will still pass affordability tests in retirement https://www.halifax-intermediaries.co.uk/criteria.html 

Hoenir

DE_612183 said:

Hoenir said:

Looking at Nationwide's interest only mortgage criteria. These factors stand out, 

• Income: Minimum basic income of £75,000 for sole applicants and £100,000 for joint applicants. 
• Equity: Minimum equity requirements vary by region. For example, properties in Greater London require £300,000, £250,000 in the South East, and £200,000 for other UK regions. 
• Mortgage Term: Maximum term of 25 years or retirement age, if earlier. 
• Repayment Strategy: A clear repayment strategy is required to repay the capital at the end of the mortgage term. 

Ah, thanks for that - during retirement the £100k would be the blocker rather than anything else.

Are all banks & BS the same?

All lenders will have their own criteria. Is a niche market though now. As what people say they will do and actually do are often very different things. 

ACG

la531983 said:

Unpopular opinion maybe - interest only mortgages should only be allowed on buy to let properties. The number of threads Ive seen on here about people suddenly surprised the term has ended and they have to pay the mortgage off, with absolutely no plan in place to do so.

I think I have only ever done about 5 interest only residential mortgages. 

I am not sure there should be an outright bad on them, but they should remain a specialist product for the minority in the right circumstances. 

Hoenir

la531983 said:

Unpopular opinion maybe - interest only mortgages should only be allowed on buy to let properties. The number of threads Ive seen on here about people suddenly surprised the term has ended and they have to pay the mortgage off, with absolutely no plan in place to do so.

That's historic. Still some 500,000 interest only mortgages still running from the early 00's.  The hey days of Northern Rock.

la531983

Hoenir said:

la531983 said:

Unpopular opinion maybe - interest only mortgages should only be allowed on buy to let properties. The number of threads Ive seen on here about people suddenly surprised the term has ended and they have to pay the mortgage off, with absolutely no plan in place to do so.

That's historic. Still some 500,000 interest only mortgages still running from the early 00's.  The hey days of Northern Rock.

Indeed. Doesn't apply to the OP seemingly.

housebuyer143

There are not many lenders who accept downsizing as a repayment strategy and if they do you need at least £250k equity in the property, some have high income requirements etc. 
I have an interest only with YBS and am using downsizing as our repayment strategy, however interest only is very niche now and not easy to get.