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27 October 2008 | News
Changes to our product range and lending policy from
Tuesday 28 October
The following products will be withdrawn at
5pm today, Monday 27 October, and replaced on Tuesday 28
October:
£50,000 – £999,999 90% LTV
range
- 2 yr fixed 90% LTV 6.69% £995 fee
- 2 yr fixed 90% LTV 7.19% No fee
The above products will be replaced by deals
with the same rate and fee, and will now have a maximum LTV of
85%.
The 5 yr fixed 90% LTV products in this range
will remain unchanged.
In addition, we will be making the following
changes to our lending policy:
Additional borrowing and term
extensions
-
The LTV limit on the total amount borrowed will be 80% on all
applications for additional borrowing. This includes new and
existing customers who want to borrow more. New customers who are
not raising additional capital are still permitted to borrow up to
90% LTV on house purchases and remortgages.
-
Existing mortgage customers will not be considered for any
further borrowing or a term extension within six months of any
previous borrowing on the same mortgage.
Interest-only lending
- All new customers (house purchase and remortgage) seeking
lending with an LTV of 75% or more, must take the entire amount on
a repayment basis only. If total lending required is below 75% LTV
then interest only or part and part is still available.
- Existing customers with interest-only lending, who wish to
borrow more and take their total mortgage lending to 75% LTV or
higher, must take the entire amount of their additional
borrowing on a repayment basis (the existing
borrowing can remain on interest-only).
- Existing customers with interest-only lending who want to
convert to another mortgage product and remain on an interest-only
basis can do so, on a like for like basis regardless of their
LTV.
- Existing customers with their lending on a repayment basis can
only switch their payment method to interest only if their LTV is
no more than 75%.
Let properties
- Existing residential mortgage customers who ask to let their
property within the first six months of taking out their mortgage
must convert to a buy-to-let product. Any early repayment charge
occurring on their original mortgage deal must be paid in
full.
- Existing residential mortgage customers who ask to let their
property after six months of taking out their mortgage will
continue to be considered. A fee of £225 is still payable and they
must complete a Lettings Application Form. If the application is
agreed they may continue on their current mortgage deal.
- Applications for second homes or holiday homes will be limited
to 75% LTV.
These changes to our 90% lending are very much
in alignment with those made by other lenders.
These changes reflect current market
conditions - in an environment where house prices are declining, it
is increasingly important to encourage customers to protect the
equity in their home.
All changes will take effect from tomorrow,
Tuesday 28 October. All cases on the old policy must be submitted
on C&G Caseflow by 5pm Monday 27 October.
Scenarios
Below are some common scenarios to help
explain how the revised policies may affect our customers. Please
note that this is not a definitive list.
New customers
- House purchase – Borrowing permitted up to 90% LTV. Anything up
to 75% can be on a repayment or interest only basis or a
combination of both. If the LTV is greater than 75% (up to 90%)
then all of the borrowing must be on a repayment basis.
- Remortgage (like-for-like i.e. no additional borrowing/capital
raising) – Borrowing permitted up to 90% LTV. Anything up to 75%
can be on a repayment or interest only basis, or a combination of
both. If the LTV is greater than 75% (up to 90%) then all of the
borrowing must be on a repayment basis.
- Remortgage (with additional borrowing/capital raising) –
Borrowing permitted up to 80% LTV. Anything below 75% can be either
repayment or interest only or a combination of both, but if the
total LTV is 75% or greater (up to 80%) then all borrowing must be
on a repayment basis.
Existing customers
- Homeowner Loan – Permitted up to 80% LTV. If the borrowing
takes the total LTV over 75%, the entire Homeowner Loan must be on
a repayment basis.
- Porting (like-for-like i.e. no additional borrowing/capital
raising) – Permitted, no changes to the account are required.
- Porting (with additional borrowing/capital raising) – The
original loan can be ported like-for-like but any new borrowing
that takes the total LTV over 75% (up to 90%) must be on a
repayment basis. If the combined borrowing is below 75% LTV, then
it can be either interest only or repayment or a combination of
both.
- Conversions (like-for-like i.e. no additional borrowing/capital
raising) – Permitted, no changes to the account are required.
- Conversions with additional borrowing/capital raising– the
original loan can be converted like-for-like but any new borrowing
that takes the total LTV over 75% (up to a maximum of 80%) must be
on a repayment basis. If the combined borrowing is 75% LTV or
lower, then it can be either interest only or repayment or a
combination of both. New borrowing cannot be given within six
months of the mortgage commencing or another Homeowner Loan being
taken.
- Existing customers wanting to convert from repayment to
interest only – Not permitted.
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