Interest Only policies and processes

Where the customer is purchasing a second residential property and the repayment strategy is the sale of the second residential property, the following applies: 

• Where the property will be occupied on a permanent basis by the customer or their family, the main residential property criteria will apply, for example £200,000 equity and maximum 50% on Interest Only. 

• Where the property is not occupied on a permanent basis e.g. a holiday home, then 75% Interest Only would be considered and there will be no minimum equity requirement.

• Where the property will be occupied on a permanent basis by the customer or their family then our Interest only letter will be required.

• Statement from the provider dated in the last 3 months in the customer’s name with the value of the scheme.

• The scheme provider must be a recognised investment manager and/or member of an appropriate financial services industry body. 

• The expiry date and ability to ‘encash’ the scheme must be on or before the end of the term. E.g. if the mortgage term is 5 years they must be able to encash within those 5 years and not after. 

• Statement from the provider dated in the last 3 months in the customer’s name with the value of the scheme.

• The scheme provider must be a recognised investment manager and/or member of an appropriate financial services industry body.

• The expiry date and ability to ‘encash’ the scheme must be on or before the end of the term. 

• E.g. if the mortgage term is 5 years they must be able to encash within those 5 years and not after. 

• Money purchase scheme – 25% of the current value will be used as the Repayment Strategy.

• Final salary scheme – The guaranteed lump sum will be used as the Repayment Strategy.

• Sight of an up to date valuation. 

• Where the current valuation is insufficient to repay the mortgage today, sight of a projection of the retirement schedule from the pension provider dated within the last 13 months.

Statement from the provider dated in the last 3 months in the customer’s name with the value of the savings.

We will only use the equity as it is at point of application (current market value less any mortgage amount) at 100%.

We require evidence the customer owns the property dated within  
3 months of the credit application:

• Land Registry search or;

• Letter from a Solicitor (who is a member of the Law Society) on their stationery confirming the ownership and details of any charges and outstanding mortgage or confirmation there are none.

Evidence of the value of the property undertaken in the last year.  This can be:

• A formal valuation from a recognised Valuer with a recognised qualification or;

• A recognised Estate Agent (and member of a national body) letter indicating a marketing price.

• Confirmation that the property(ies) is/are insured, and details of the insurance must be contained in the application.