Skipton Building Society has introduced a range of interest-only mortgages to help people on the property ladder.
The new range provides 60 per cent, 70 per cent and 80 per cent loan-to-value products, which are available to purchase and remortgage customers.
The purchase range offers free valuations and includes a fee-free 2-year fix at 1.66 per cent on 60 per cent LTV, 1.33 per cent on 60 per cent LTV with £1,495 completion fee and 1.79 per cent to 80 per cent LTV with £1,495 completion fee.
Five-year fixes include a fee-free 2.25 per cent on 60 per cent LTV and 2.29 per cent on 80 per cent LTV with £1,495 completion fee.
The interest-only remortgage range, which offers fee-free valuations and standard legals, includes a fee-free 2-year fix at 1.79 per cent on 60 per cent LTV and 1.46 per cent on 70 per cent LTV with £1,495 completion fee. The 5-year fixed range includes a fee-free 2.24 per cent on 60 per cent and 2.21 per cent on 80 per cent LTV with £1,495 completion fee.
The society has also enhanced its policy for interest-only residential lending. The maximum loan of £500,000 for interest-only deals has now been removed, with standard maximum loan limits now being applied.
The enhanced policy for interest-only residential lending is also available for those who want Skipton Bespoke. The society launched this for customers looking to borrow more than £1m.
Provider view
Paul Darwin, Skipton’s director of intermediary relationships, said: “At Skipton we recognise that there is a place for interest-only [deals] in the market as long as borrowers have a defined exit strategy to repay the loan.
“We are taking an appropriate and responsible approach to this type of lending. Our latest lending policy changes are a reflection of this and provide greater choice to borrowers looking at this route.”
Adviser view
Carl Shave, IFA at Suffolk-based Just Mortgage Brokers, said: “The new Skipton interest-only range offers a competitive selection of rates across the market. Pricing their products keenly in an environment that presents a reduced selection of lenders when interest-only as a repayment vehicle is a requirement, is pleasing to see.
“Although interest-only still looks to remain a niche product in the mortgage market, it has a very valid place for certain borrowers, where this will continue to be a suitable repayment plan.
“Clients with income sources such as the self-employed, or employees who receive bonuses, can still demonstrate valid reasons as, too, can those with future downsizing plans. Ultimately, interest-only carries risk to lenders and borrowers alike.
“However, with improved lender understanding and good advice given to borrowers, it can continue to have a valid place in the market and one where I will still continue to recommend where relevant.”
Charges
Mix of fee and non-fee.
Verdict
Although it is true that interest-only mortgages can be risky, there is still clearly a niche demand for them.
Here, Skipton has introduced a range of rates to help people either get on the property ladder or climb further up. With the right advice – the new offerings can continue to have a valid place in the market. For this, it is clear Skipton is committed to the industry and aims to strengthen its position in the housing market as one of the leading lenders.
