View more on these topics

Woolwich adds plausibility check

Woolwich has tightened its interest-only criteria by introducing a “plausibility” check to ensure a customer’s repayment plan will be able to repay the mortgage at the end of the term.

The change, which took effect from January 23, means borrowers will be asked for documentary evidence to determine the feasibility of the plan.

The FSA’s final mortgage market review consultation paper, published last month, proposes that lenders must assess affordability for interest-only loans on a capital and interest basis unless the borrower has “a clearly understood and believable” way to repay the mortgage.

Woolwich, which is the intermediary lending arm of Barclays, will no longer take into account the potential growth of any investments the customer has when assessing the amount it is willing to lend on an interest-only basis.

John Charcol senior technical manager Ray Boulger says: “It is hard to think of a better way to decline a large proportion of further advance requests from people who have an interest-only mortgage, thus pushing borrowers either to remortgage or more expensive alternatives such as a second-charge or an unsecured loan.”

Recommended

1

Coalition cracks grow over Dilnot LTC plans

Senior Liberal Democrat sources have raised concerns about Andrew Dilnot’s long-term care funding plans, saying the proposals are expensive, bureaucratic and regressive. The Dilnot commission report, published in July last year, calls for a cap on individuals’ lifetime contributions to social care costs of between £25,000 and £50,000, with £35,000 the recommended figure. When the […]

5

Former RBS chief Goodwin stripped of knighthood

Former Royal Bank of Scotland chief executive Sir Fred Goodwin has been stripped of his knighthood. Prime Minister David Cameron announced two weeks ago that Goodwin’s knighthood would be referred to the honours forfeiture committee. Goodwin was awarded the honour by the Labour government in 2004. In a statement this evening, the Cabinet Office highlighted […]

Newsletter

News and expert analysis straight to your inbox

Sign up

Comments

There is one comment at the moment, we would love to hear your opinion too.

  1. These are eevr moving goalposts regarding the repayment of interest only.

    The fact is they are Interest Only because nobody intends paying the loan off until the property is sold.

    If the regular has a problem with that, ban all interest only loans now, and customers can have capital repayment only to be repaid at state retirement age.

Leave a comment