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First-time Buyers

Skipton Building Society clamps down on interest-only

paulajohn
Written By:
paulajohn
Posted:
Updated:
10/06/2013

Skipton’s interest-only mortgage applicants now need to earn at least

Skipton Building Society is the latest in a long line of mortgage lenders to tighten criteria regarding interest-only mortgages, making it more difficult to secure a loan on this basis.

With an interest-only mortgage, the monthly repayments you make to the lender consist of just the interest you owe and you do not repy any of the capital debt outstanding.

These deals were until recently widely available and very popular. However, in the current uncertain economic environment, and with the regulator poised to impose new demands on mortgage lenders with the aim of eliminating risky lending, most lenders have changed the rules they aply to interest-only borrowing.

A Skipton spokeswoman said:

“Skipton is committed to offering a wide variety of mortgage products, including interest-only. As a responsible lender, we want to ensure borrowers do not overstretch themselves and can afford to meet their mortgage obligations going forwards.

“So, for interest-only lending applications, as well as our usual credit and affordability checks, we ask that the main earner has a minimum income of £40,000. This is in line with other lenders, and helps ensure we lend prudently and responsibly.”