Lloyds introduces spot-checks for interest-only mortgages
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Lloyds Banking Group will conduct spot checks at random on brokers submitting interest-only cases and ask them to supply evidence that the client has an appropriate repayment vehicle in place from October 15.
In May, Lloyds reviewed its interest-only lending policy, declaring that it would no longer accept selling a main residence as a repayment method for interest-only loans and required proof of a person’s ability to repay the capital element of the mortgage.
It concluded acceptable repayment vehicles for interest-only mortgages are endowments, pensions, Isas, share portfolios or a lump sum.
The sampling will be conducted after the offer stage.
If the broker does not provide the documentation, Lloyds will contact the client directly.
A spokeswoman says: “In May, the Group announced that it has conducted a strategic review of interest only lending. We are now looking to implement the change that we communicated in May – introducing random sampling, enabling us to ensure the existence of an appropriate repayment vehicle.”
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Readers' comments (1)
Anonymous | 6 Oct 2010 5:36 pm
'Lloyds in shutting stable door once interest only has bolted' shocker...
I notice there's no mention of how long Lloyds used the facility of pure interest only to build up lending business in the last 10 years??
LTSB/C&G were quite happy to take the business then.
Would love to be a fly on the wall when those clients get invited in for a 'review'.
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