Barclays are improving the lending criteria for part and part mortgage deals where the sale of property is used as the repayment vehicle, following a recent review of residential loan rules.
Mortgage customers who meet the minimum income requirements will now be able to borrow up to 75 per cent loan-to-value (LTV) with a maximum of 50 per cent LTV on an interest-only basis.
The minimum income criteria for sole applicants is to have gross annual earnings of at least £75,000. The requirement for joint applications is one applicant must have a gross income of at least £75,000 or a joint gross income of at least £100,000.
The changes made to the sale of property (SOP) rules allow higher LTV borrowing as well. Previously for residential lending, where SOP was used as the repayment vehicle, a maximum 50 per cent LTV applied. Mortgage customers will now be able to borrow up to 75 per cent LTV with a maximum of 50 per cent LTV on an Interest Only basis.
After the interest-only element of the lending, mortgage customers are required to have £300,000 of equity in the property.
Example: On a £600,000 property a customer who wishes to use sale of property as a repayment vehicle can now borrow a total of £450,000 split between £300,000 on interest only (50 per cent LTV and minimum £300,000 interest only equity) and £150,000 on capital and interest (25 per cent LTV). Under our previous policy the maximum available on interest only where sale of property was being used would have been £300,000.
