Available to new purchase and remortgage customers only.
We’ve launched the option to choose Interest Only (IO) or part and part repayment basis across our new purchase and remortgage product range*.
Please see our specific interest only criteria below to ensure your client is eligible before submitting an application on NFI Online.
For our interest only new purchases, remortgages and part and part lending, the following eligibility criteria will apply:
- maximum 60% loan to value (LTV)
- minimum income criteria of £75,000 for sole applicants, £100,000 for joint applicants**. This is based on basic income only.
- If your client is eligible, they can use secondary income, bonus, overtime or commission for their affordability assessment.
- Self-employed income accepted as per our standard criteria.
- minimum equity varies by region***. This will be based on the region selected on the ‘Loan Requirements’ page on NFI Online. To check which region the property is situated in you can use the House Price calculator.
- maximum term of 25 years (or retirement if sooner)
- sale of main residence as repayment strategy
- can’t be used in conjunction with any other scheme (e.g. Shared Ownership, Right to Buy, Help to Buy)
- minimum lease term of 70 years at application
- maximum loan amount of £2 million.
- First time buyers are not eligible for interest only purchase applications.
Cases will be assessed on a capital and interest basis. Your client won’t be eligible if:
- they declare that they have a secured loan, but they’re not settling it
- a secured loan has been found at the Bureau but isn’t declared
- a secured loan has been declared but we find a higher monthly payment at the Bureau
- your client is retired, or the term will go into retirement
To apply for an interest only new purchase or remortgage, your client will need to sign our ‘Sale of residence customer declaration form’ and attach it to the case in NFI Online before any mortgage offer can be issued. The declaration confirms that your client understands the requirement to sell their property to repay the outstanding balance at term expiry.
* If you wish to port any existing mortgages in a purchase application, additional borrowing must be on a capital and interest (Repayment) basis only. Interest only new borrowing is only available to non-porting purchase applications. If your client wishes to purchase with an element of interest only they'll need to choose a new product and pay any ERC's applicable on the existing product. If they currently have an existing Interest Only product and are looking to increase their borrowing on interest only, and wish to port with a top up on interest only, please speak to your BDM.
** The minimum income criteria will determine if your clients are eligible for our interest only product and the assessment is made using their basic source of income.
*** Minimum equity will be applied automatically at the Decision in Principle (DiP) stage. After the valuation, if there’s any impact on the minimum equity requirement it could mean that your client is no longer eligible for this proposition.