SamUK

iTrader: (1)

That sucks, specially if the other banks follow!

http://www.moneysavingexpert.com/new...only-mortgages

john banks

I think this is a good move.

BLU

iTrader: (27)

I saw the title and thought interest free mortgage, I want one of those.

Then I realised you meant interest only

zip106

I didn't know you could still get interest only mortgages!

Do they still run with endowments or other 'savings' plans?

Dingdongler

Still widely available Zip. They ask for a 'vehicle' for repayment but this is a very loose term.

Clarebabes

I agree. Interest only meant that people borrowed more than they could afford because the repayments were lower.

Devildog

Rubbish.

Sorry John, but if you move property a lot, or buy for short term convenience or for a fixed period of time, a repayment mortgage just doesn't make sense financially.

Devildog

Clare

Your post doesn't make sense. Lower payments balances out higher borrowings

The only issue with interest only mortgages arises if you can't repay the principle sum at the end of the term because your repayment vehicle doesn't perform, or you don't have one.

hodgy0_2

totally agree, and have said so on this forum many times

Clarebabes

That's what I mean... I did write a bit more, but couldn't be bothered.

john banks

For sensible borrowers with a genuine repayment vehicle they could be very convenient, but I understand that the likelihood of interest only lending becoming distressed is higher than capital/repayment.

A few factors might explain that:

Overleveraged BTL empires with fantasy valuations of trashy off plan 2 bed flats with poor rent cover
Distressed borrowers moved to interest only
No enforced reduction in LTV leaves less room to negative equity
Fantasy repayment vehicles that were sold on the basis of 7% annualised return as an "illustration" where the real return has been negative and the property the loan is secured against has depreciated
Paper property value increase has funded an interest only purchase of an X5 on a 25 year term

I'd love an interest only loan on some business assets as it would mean that I don't keep paying them off and have a real expense for tax purposes, but quotes on capital/repayment terms are offering really good rates that after tax relief are about stupidly good, and the lender won't entertain interest only despite many similar premises being on interest only from the good days.

I don't think I approve of their withdrawal because I can't get a good one, but you never know

ReallyReallyGoodMeat

Rent?