The Melton Building Society is continuing to expand the range of services for the so-called “mortgage prisoners”, borrowers not eligible for the deals they had agreed before the introduction of the Mortgage Market Review (MMR) last April.
The lender has now decided to extend its proposition to consider interest only applications from borrowers under the MMR Transitional Arrangements rules.
Applications will be considered from all brokers via Sesame Bankhall Mortgage Processing. All mortgage products within the Society range are available for applications under MMR Transitional Rules.
In order for an application to be considered, the following criteria must be met:
- Prime residential mortgage
- Interest only (outside M25) or capital and interest repayment method
- Maximum loan to value of 60%
- £ for £ lending only (no additional borrowing and no addition of fees)
- Minimum loan £100,000 and maximum loan £350,000
- New mortgage rate and monthly payment must be the same or lower than the current mortgage
- Existing mortgage must have been held for a minimum of 3 years with no arrears at any time
- Borrowers must have a clean credit history, no adverse credit will be permitted
- The new mortgage must be in the best interest of the borrower
“The majority of enquiries so far about transitional arrangements have come from borrowers with interest only mortgages and so we have made the decision to consider such enquiries as we believe it is our responsibility to help existing borrowers who have a good payment record and no change of circumstances.
“As a small mutual which takes a realistic approach to lending based on individual circumstances, we are best positioned to help these mortgage prisoners who may otherwise struggle with computer generated affordability tests.”
“However, with the introduction of the new Mortgage Credit Directive in March 2016 which will prohibit the use of transitional lending in this way, time is running out for borrowers trapped by their mortgage deals and we need to make sure borrowers are aware of the help that is available,” Martin Reason, chief executive of the Melton, commented.
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The transitional provisions in the MMR allow lenders to provide a new mortgage or deal to customers with existing loans who may not meet the new MMR requirements for the loan. The borrowing is not able to exceed the amount of their current loan, unless funding is required for essential repairs. The decision on whether or not to lend in these cases remains with the lender. (FCA explanation of the MMR changes)
