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Important: Changes to Lending Criteria for Interest Only Residential Mortgages & Notification on Product Withdrawal

Changes to our lending criteria for Interest Only Mortgages.

24th February 2012

Today we are announcing important changes to our lending criteria for Interest Only Residential Mortgages which take effect on 1 March 2012.

In common with other lenders, we will now require additional information to be provided to evidence how the outstanding capital will be repaid at the end of the mortgage term. To assist you with this, a supplementary form is now available from the Literature page on our website to collate the details and this must be completed and submitted with the application form.

We are pleased to announce that, where the repayment strategies meet the Bank’s criteria and can be evidenced, the maximum Loan to Value (LTV) will remain at 75%. Where the repayment vehicle is either cash savings or downsizing, the maximum LTV will be 50%.

Full details of acceptable repayment strategies are available now from the Criteria page of our website.

Other key changes are:

  • The maximum term on an Interest Only Loan will be 25 years
  • The maximum age of an applicant at the end of the term will be 65
  • The maximum loan available where any element of the loan is Interest Only will be £1,000,000

The revised criteria will be applied to all new applications received from 1 March 2012.

Product withdrawal.

The following products will be withdrawn from 5pm today, 24 February:

  • 2 year Fixed Rate maximum 70% with an initial rate of 3.19%
  • 3 year Fixed Rate maximum 70% with an initial rate of 3.39%
  • 5 year Fixed Rate maximum 70% with an initial rate of 3.79%
  • 2 year Offset Discounted maximum 60% with an initial rate of 2.99%

To help you manage any applications in progress, we will accept applications for the withdrawn products up until:

  • Today, Friday 24 February by 5pm if submitted via MTE
  • Monday 27 February by 5pm if submitted by post

For further information about this communication, please contact your local Relationship Partner.

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