Hinckley & Rugby Building Society is introducing a new interest-only mortgage on Friday December 14.
Hinckley & Rugby Building Society is introducing a new interest-only mortgage on Friday December 14.
A number of lenders have pulled out of interest-only lending for new borrowers, such as RBS, NatWest, Nationwide Building Society and Coventry Building Society.
Others, such as Santander have restricted its uptake by capping interest-only lending at 50 per cent LTV.
Hinckley & Rugby’s two-year discount mortgage has an initial rate of 4.99 per cent and is available up to 50 per cent loan-to-value (LTV).
The mortgage is a 0.65 per cent discount off the society’s standard variable rate (SVR), currently 5.64 per cent. The overall cost for comparison is 5.7 per cent APR.
There is an arrangement fee of £395 and a completion fee of £695 and the latter can be added to the loan. There are free valuations for property values up to £1 million. The minimum advance is £50,000 and the maximum is £1.25 million.
Hinckley & Rugby chief executive Chris White said: “Several very large lenders have already pulled out of interest-only mortgages but we feel there is still a strong case for offering this type of product in the right circumstances.
“At the same time, we don’t have the capacity or risk appetite to fulfil the potential demand for interest only loans that might result from the largest lenders exiting the market.
“We have therefore designed a special mortgage scheme specifically for interest only lending which is generally available, subject to customers fulfilling our normal lending criteria and having an adequate mortgage repayment vehicle. We will keep the success of this scheme under careful review.”
