Skipton Building Society has introduced a £40,000 minimum income requirement for all residential interest-only and part-interest-only applications.
The change takes effect from today and applies to the gross income of the main earner on an application.
Cases where a decision in principle has been obtained but an application has not yet been submitted will be accepted under the old criteria, without a minimum income requirement, until close of business on 14 June.
In terms of acceptable income, Skipton will accept 100 per cent of permanent basic income and guaranteed bonus or overtime payments and 50 per cent of regular, but not guaranteed, bonus payments.
It will also accept 100 per cent of working tax credits or benefits, a customer’s pension and 100 per cent of of car allowance and maintenance payments, if evidence is supplied.
Skipton will lend to a maximum of 60 per cent loan-to-value on a pure interest-only case and 80 per cent in a part interest-only and part-capital repayment and interest case, with the amount over 60 per cent LTV being on a capital repayment and interest basis.
A Skipton spokeswoman says: “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.”
Skipton has also increased its maximum loan size for first-time buyers from £300,000 to £500,000 today, as revealed last week by Money Marketing’s sister title Mortgage Strategy. The maximum loan size for all other borrowers is currently £1m, or £500,000 for 90 per cent LTV mortgages.
Earlier this month, Mortgage Strategy revealed that Barclays has scrapped its minimum loan size of £300,000 in favour of a £75,000 minimum income requirement for interest-only applications.