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Nationwide axes holidays on new loans

Nationwide is scrapping the option for borrowers to take a repayment holiday on new mortgage deals.

It also offers an overpayment option allowing up to £500 per month extra payments but will no longer allow new borrowers to draw down any money they have overpaid if they need to access cash.

A spokesman says: “We are not removing these features for existing mortgage customers but we are planning to amend some of the flexible features of new mortgage deals taken. New mortgage holders will retain the option to overpay and reduce or stop making payments until the overpayment reserve is used up but will not have the facility to borrow back any overpayment reserve. We are moving more in line with the market.”

First Action Finance head of communication Jonathan Cornell says: “I am surprised Nationwide has taken a step like this. I would imagine that by removing this option this would make it easier to sell on these loans as part of a securitisation. If this is the case, I suspect that we will see other lenders following suit.”

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