The State-owned lender will no longer accept inheritances, remuneration bonuses, dividends, regular overpayment or the intention to switch to repayment at a future date as suitable repayment vehicles.

In addition, Northern Rock will only accept the sale of a property as a means of repayment on loans with a maximum LTV of 60% and minimum equity of £150,000.

The move follows its decision in March to reduce its maximum LTV on interest-only cases from 85% to 75%, and marks the second high profile lender after Lloyds Banking Group to restrict interest-only criteria recently.

A spokesman for Northern Rock said the changes were part of its ongoing review of its products and policies: “Northern Rock still provides interest-only loans, but borrowers have to have a suitable repayment vehicle. As a responsible lender, we are mindful of having to provide affordable loans.”