Nationwide Building Society is today adding Interest Only1 to its mortgage range – initially offering the product through brokers only. This follows on from the Society previously announcing its re-entry into the residential interest only market after eight years to ensure continued support to the mortgage market and give more flexibility to homeowners.
It will be offered for remortgages only at a maximum of 60 per cent loan-to-value (LTV) and will require a minimum equity of £300,000 in London, £250,000 in the South East and £200,000 across the rest of the UK.
Rates on the Society’s Interest Only products are the same as its capital repayment mortgages and start from 1.29%.
In terms of repayment, this will be restricted to the sale of the main residence only, with part interest only and part capital repayment mortgage also allowed subject to the same criteria.
Anyone applying for the Society’s Interest Only will need a minimum income of £75,000 for sole applications (or £100,000 if joint) and the product will come with a maximum term of 25 years (or retirement age if that is sooner).
Henry Jordan, Nationwide’s Director of Mortgages, said: “As the UK’s second largest lender, it is natural that we continue to look at ways we can support the mortgage market. At almost seven per cent, interest only remains an important part of the market, which is why we are launching this new product, initially via brokers. During these unprecedented times, it is important to continue offering a variety of options and flexibility to homeowners and, by adding interest only, we are providing access to our standard product range to applicants with good equity.”
Martin Stewart, Director at London Money, commented: “I think this is a great initiative from Nationwide and brings them in line with the other major high street lenders in the UK. The Interest Only market has evolved a lot over the past 10 years and, in doing so, we are now focusing on the opportunities where Interest Only is a viable alternative for the borrower. I know Nationwide, as a responsible lender, has spent a lot of time on its due diligence to make sure its offering is the right one. I believe that it is, and this new initiative should see them begin to challenge their competitors in what is a very active part of the market.”
Greg Cunnington, Director of Lender Relationships and New Homes at Alexander Hall, said: “It is really positive to see Nationwide returning to the interest only market especially when clients, now more than ever, need the widest range of available options. Interest only mortgages are a core part of the holistic advice discussion for intermediaries and, I’m sure I speak for many of them when I say, I’m delighted to see Nationwide showing their support in this way.”
