Precise Mortgages has entered the interest-only market with the launch of two products.
It has launched an interest-only option and a part-and-part option for those who need to manage monthly outgoings or may need to pay off their mortgage with their pension.
The specialist lender said the options were available on all Prime Tier 1 and 2 products up to 65 per cent loan to value for the interest-only option and 75 per cent loan to value for the part-and-part option.
With the part-and-part option, the interest-only element must not exceed 50 per cent LTV.
Alan Cleary, managing director of Precise Mortgages, said customers must have a credible repayment strategy in place with the potential to repay the interest only balance at the end of the term.
"Some customers have sufficient assets to repay their mortgage and therefore want an interest-only option. The changes we have made will give the right customers more choice and will give brokers a better chance of placing the case," he said.
Acceptable repayment vehicles include the sale of the security property, sale of an additional property, savings or investments, and pensions.
Ray Boulger, senior technical director at boker John Charcol, said: "It's really interesting to see Precise moving into this, particularly into the part-and-part option. The LTVs it is offering are quite typical, and crucially it is allowing people to use sale of the mortgaged property as a repayment vehicle.
"For many of the clients that come to us needing this, this is the obvious and sometimes the only solution. It would be interesting to know what the minimum equity is for the client to have in the home to be accepted for this.
"The FCA requires those who offer interest-only mortgages to ensure that the borrower has a robust solution for repayment. It is up to the lender to work out what that is. It would be interesting to see how Precise will evaluate an investment product as a repayment vehicle for example."
