IOM withdrawal could create mortgage prisoners

Sam Cordon

November 13, 2013

Many lenders have withdrawn from the interest-only market or have significantly paired back their maximum LTVs following the Mortgage Market Review, which comes into force in April next year.

People who were previously on an interest-only mortgage who now wish to remortgage or capital raise, may find themselves trapped if their lender has withdrawn from the market.

They will need to move lender as a result. This may necessitate converting to a more expensive capital repayment mortgage.

However, Aldermore is continuing to lend in the interest-only market and within the MMR principles, by ensuring clear repayment strategies are in place and that the loan could be serviced on a repayment basis if ever needed.

Charles Haresnape, managing director, residential mortgages, Aldermore Bank, said: “We remain open for business in the interest-only area up to 75% LTV, having revised our criteria.

“Many potential interest-only borrowers are very creditworthy and, with the right level of lender due diligence, would be excellent borrowers.

“We want to help those people who are at risk of becoming mortgage prisoners.”

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