NatWest Interest Only Mortgage Criteria
- The interest only mortgage will need to be taken out on an advised basis
- Earnings will need to be at least £75,000 pa
- Up to 75% of the mortgage can be taken on your home or property a IO basis
- Their will need to be an approved capital repayment plan in place
- If the sale of the property is teh repayment strategy then NatWest will only allow you to borrow up to 50% of the property value on an interest only basis with up to 25% having to be on a repayment basis.
- The maximum mortgage age is 70 and the eldest applicant will be used on a joint basis to determine when the mortgage will need to be repaid
- If the repayment strategy is sale of your house then the property will need to currently have £200k or more equity at the end of the mortgage term.
- The Natwest interest only mortgage is not available with shared ownership or help to buy schemes
- You cannot switch your mortgage to an interest only basis to consolidate debt
Acceptable Repayment Strategies For A NatWest Interest Only Mortgage
- Sale of property. To qualify the property must be in the UK
- Investment plans such as endowment plans, unit trusts, investment trusts, OEICs. These plans can be direct investments or within an ISA wrapper.
- UK authorised pensions. for money purchase schemes 25% of the current value will be taken and for final salary pensions the guaranteed lump sume can be taken.
How Can I Apply For A NatWest Interest Only Mortgage?
You can call our independent mortgage team to discuss what interest only deals are available to you.
If you are not sure whether now is the right time to remortgage or whether you can get an interest only deal, then speak to our independent mortgage broker team who will be able to offer impartial advice on types of mortgages and your options. With the base rate at a all time low it is a good time to review your current mortgage loan options as mortgage rates are generally competitive at the time of writing. With an independent broker you may be able to access broker only products which sometimes are more cost effective than products offered direct. Mortgage customers who go direct to a lender may have to wait longer than people who go through a broker to have their situation assessed.
What is an interest only mortgage?
An interest only mortgage is where you are only obliged to cover the mortgage’s interest each month. Of course, like any mortgage, the full amount that you borrow needs to be repaid at some point; this is often at the end of the mortgage term. If there is a shortfall, then you will still have to repay all the capital at the end of the mortgage term.
Typically, interest only mortgage monthly mortgage payments are lower than other mortgage payments. However, it should be noted that the total amount of interest that you pay over the life of the mortgage will be more than a standard mortgage. In addition, the risk of negative equity is much greater because the mortgage balance is not reducing with every payment.
NatWest offer an interest only mortgage with competitive rates. If you want to explore your NatWest interest only mortgage options, then use the NatWest interest only mortgage calculator at the top of the page.
Why do people choose an interest only mortgage?
One of the main reasons that people look to secure an interest only mortgage is to keep their monthly outgoings as low as possible.
Interest only mortgage when mortgage deal has come to an end: You could access lower interest rates and smaller monthly payments if you switch your mortgage provider. If your initial mortgage deal has come to an end, you could explore your NatWest interest only mortgage options to get a better deal.
Release equity in your home: If you need to access a substantial amount of money, you could remortgage your property with an interest only mortgage.
People often remortgage to provide money for:
- Home improvements
- New Kitchen
- New Ensuite bathroom
- Consolidate other existing debts.
Remortgaging with a NatWest interest only mortgage may be a good low cost way of paying for a new home project.
How to get an interest only mortgage
There is not one definitive set of requirements for an interest only mortgage, as the criteria will change from lender to lender. However, it is likely that you will need the following to access an interest only mortgage:
- A repayment vehicle strategy: Lenders will need the outline of your repayment strategy to demonstrate how you will repay the mortgage at the end of the term. What is acceptable to a lender as a repayment strategy will vary, but investments such as a stocks and shares ISA may be an option. Some but not all lenders will except a repayment vehicle strategy as the sale of your existing property.
- A low loan to value (LTV): Lenders often will only lend up to a certain percentage of the value of the property. The majority of lenders are reluctant to lend more than 75% LTV. It is possible to access higher LTV through intermediaries such as professional brokers.