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The future of low-cost home loans has been thrown further into doubt after two of the UK's largest lenders closed their doors to interest-only deals. In a move The Independent described as a ‘watershed moment for the product', Royal Bank of Scotland and NatWest will no longer accept mortgage applications on an interest-only basis.
If you're moving home, you may well want to remain with your mortgage lender. You may be on a great interest rate such as a fixed or discounted deal. Or, you may find that there are ‘early repayment charges' if you repay the mortgage on the sale of your home and take out a new home loan with someone else.
The government's NewBuy mortgage indemnity initiative has received a setback, with some of the limited number of mortgages available under the scheme having their interest rates increased by lenders. Just three lenders were signed up to NewBuy when it was launched in mid-March 2012, and all three have raised interest rates in the subsequent few weeks.
The Skipton Building Society is the latest lender to cut the maximum loan-to-value (LTV) on its interest-only mortgages, effective today. The maximum LTV for interest only lending has been reduced from 75% to 60%. Applications up to 80% LTV can be split, with a maximum 60% on an interest-only basis and the remaining 20% on a capital-and-interest basis, while any loan above 80% must be wholly on a repayment deal.
HSBC, one of the UK's largest mortgage lenders, is currently top of the Best Buy mortgage table across a number of different mortgage products, including fixed, tracker and first-time buyer mortgage rates.
HSBC First-Time Buyer Mortgage
HSBC is currently offering a two-year first-time buyer mortgage at a borrowing rate of 4.49% to first-time buyers with a 10% deposit, subject to a rather reasonable arrangement fee of £499.