Back to April 2016

Leeds criteria changes aid interest only borrowers

Improvements to its interest only mortgage range are enabling Leeds Building Society to help more under-served borrowers.

The Society has continued to improve its lending criteria on part and part interest only mortgages and will now accept sale of property as a repayment strategy up to 75% LTV (loan to value).

There has been strong demand for the Society’s award-winning part and part interest only mortgages since their launch in 2015.

The products are available up to 75% LTV, with a maximum of 50% on an interest only basis and the remainder on a capital and repayment basis.

Leeds Building Society is unique among interest only lenders in not imposing minimum income requirements and now calculates the minimum equity of £150,000 based on the borrower’s term end position.

“We always try to be responsive to borrowers’ and brokers’ feedback and have kept our criteria under review since we launched part and part interest only mortgages almost a year ago,” said Martin Richardson, Leeds Building Society’s Director of Business Development.

“These latest changes are part of how we’ve further refined and improved criteria since we brought this award-winning product to the market.

“As anticipated, part and part has been particularly popular for remortgages as it offers borrowers currently on full interest only, the flexibility to start paying down their loan in a manageable way.

“Part and part reduces the payment shock of moving to a full repayment mortgage for homeowners who’ve yet to reduce the capital they owe, because of an endowment shortfall, for example.

“It’s also relevant to high net worth borrowers, who are looking to use an interest only mortgage as part of a wider investment strategy, or for home buyers who can expect their future income to rise significantly, such as when they complete professional qualifications.”

As a responsible lender, Leeds Building Society assesses affordability for all borrowers on the basis of a full capital repayment mortgage.

Ends

Notes to Editors

The Society previously:

  • accepted sale of property as a repayment strategy up to 50% LTV; and
  • calculated minimum equity at the beginning of the term rather than the end.

Interest Only Part and Part Fees Assisted 2 Year Fixed Rate mortgage at 1.99% up to and including 30th June 2018:

  • 99% available up to 75% LTV
  • Interest only element up to 50% LTV
  • £999 Arrangement Fee
  • No Completion Fee
  • Free standard valuation on properties worth up to £2m
  • Fees assisted legal services for standard remortgages
  • 10% capital repayments are allowed each year

Interest only Part and Part 5 Year Fixed Rate mortgage at 2.89% up to and including 31st May 2021:

  • 89% available up to 75% LTV
  • Interest only element up to 50% LTV
  • £999 Arrangement Fee
  • No Completion Fee
  • Free standard valuation on properties worth up to £2m
  • Fees assisted legal services for standard remortgages
  • 10% capital repayments are allowed each year

Interest only Part and Part 2 Year Discount Rate mortgage at 1.75%:

  • 75% available up to 75% LTV
  • Interest only element up to 50% LTV
  • £999 Arrangement Fee
  • No Completion Fee
  • Free standard valuation on properties worth up to £2m
  • Fees assisted legal services for standard remortgages
  • 10% capital repayments are allowed each year
 Part & Part 2yr FixedFull Repayment 2yr Fixed
Term 25 Years 25 Years
House Price £300,000 £300,000
Total Mortgage £225,000 £225,000
LTV 75% 75%
Amount of Mortgage on Interest Only £150,000 £0
Amount of Mortgage on Repayment £75,000 £225,000
Initial Monthly Repayment £568.50 £959.26

*Based on Interest Rate of 1.99% for 2yrs.

Leeds Building Society received the ‘Innovation Award (Lenders)’ at the Mortgage Finance Gazette Awards 2016, for part and part interest only mortgages, the third consecutive year the Society has won this category, as well as the award for ‘Product Innovation (Lenders)’.

The Society also has been named ‘Best Regular Savings Account Provider’ for the second consecutive year by independent consumer advice website Savings Champion.

Independent consumer group Fairer Finance has awarded the Society its Gold Ribbon rating for savings and Silver Ribbon rating for mortgages, based on customer scores for happiness, trust, complaint handling and transparency.

Leeds Building Society has 67 branches throughout the UK, Gibraltar and Ireland and assets of £13.5bn (at 31st December 2015). The Society has operated from the centre of Leeds since 1886.