The lender has launched part and part interest-only mortgages available up to 75% LTV, with a maximum of 50% on an interest-only basis and the remainder on a capital and repayment basis.
Martin Richardson, Leeds Building Society’s general manager for business development, said the society is offering borrowers who are currently on full interest-only an opportunity to remortgage and benefit from the flexibility of starting to pay down their loan in a manageable way.
“There will be many borrowers who took out interest-only loans at the peak of their popularity in the mid-2000s, some of whom may have an endowment shortfall or have yet to reduce the original amount of their loan,” he said.
“Our part and part deals provide borrowers with the ability to start reducing the capital they owe, without the payment shock of moving to a full repayment mortgage. As a responsible lender, we assess affordability for all borrowers on the basis of a full capital repayment mortgage.”
Richardson added that part and part may also appeal to high-net-worth borrowers who are looking to use an interest-only mortgage as part of a wider investment strategy.
The society’s new part and part interest-only mortgages are:
Two-year fixed rate interest-only mortgage at 2.39%
Five-year fixed rate interest-only mortgage at 2.99%
Two-year discounted rate interest-only mortgage at 2.35%
All come with a free valuation, fees assisted legal services and a £999 fee.
Jeremy Duncombe, director of L&G Mortgage Club, said: “Giving the flexibility of selecting part and part will allow borrowers to benefit from lower rates than they may be trapped on, therefore driving more remortgage business and effectively giving borrowers a pay rise.”
