Halifax places further restrictions on interest-only

Halifax Intermediaries will now require borrowers to provide evidence of a repayment plan prior to the offer stage when applying for interest-only mortgages.

The lender notified intermediaries of the change via email today. The change takes effect from May 31.

Existing customers wishing to convert all or part of their mortgage to interest-only will also have to provide evidence of a suitable repayment plan.

Lloyds Banking Group says the change brings Halifax Intermediaries’ criteria into line with the rest of the group.

LBG first made changes to its interest-only policy in May last year when it declared that selling your main residence was no longer an acceptable repayment method and asked borrowers to provide details of the method they would use to repay the mortgage capital.

The email says: “As a responsible lender, we believe that it is necessary to ensure our borrowers have an appropriate repayment strategy in place to pay off the mortgage balance at the end of their term.”