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Skipton raises interest-only income bar to £40,000

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  • 10/06/2013
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Skipton raises interest-only income bar to £40,000
Mortgage applicants earning less than £40,000 will be shut out of Skipton Building Society’s interest-only range from today.

The mutual has introduced a minimum income requirement for all residential interest-only applications from today. Those who have obtained a decision in principle but have not submitted their application have until the 14 June 2013 to make their application under the old criteria.

The income requirement requires at least one applicant to earn more than £40,000. Combined income is not accepted.

Ash Ridge Asset Management adviser Jane King said lenders should focus on affordability and repayment vehicles rather than income: “We have got Woolwich doing £75,000 and Skipton doing £40,000 – the figures are so different.

“I am assuming they want to cut out interest-only mortgages and this is a polite way of doing it. It is a nightmare for us brokers because lenders keep changing criteria from one minute to the next. There is no consistency.”

Income is defined as the gross permanent basic income plus any guaranteed bonus or overtime payments, and half of regular, but not guaranteed, bonus payments. Working tax credits or benefits, a customer’s pension and car allowance and maintenance payments may also be included, with sufficient evidence.

The lender will offer interest-only products at a maximum of 60% loan-to-value and 80% on a combined interest-only and capital repayment and interest case.

A Skipton spokeswoman said: “Skipton is committed to offering a wide variety of mortgage products, including interest only. As a responsible lender, we want to ensure borrowers do not overstretch themselves and can afford to meet their mortgage obligations going forwards.

“So, for interest-only lending applications, as well as our usual credit and affordability checks, we ask that the main earner has a minimum income of £40,000. This is in line with other lenders, and helps ensure we lend prudently and responsibly.”

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