9 October 2012 by

Nationwide – No Longer Interested

Nationwide Building Society has announced it will no longer offer mortgages on an interest-only basis. The rule change, effective from 11 October, is the latest move by mortgage lenders to ensure that borrowers are not taking on loans they cannot afford to repay.

This type of mortgage, which allows borrowers to pay interest every month but to postpone payment of the capital they borrow until the end of the mortgage term, was popular during the housing market boom when some buyers saw them as a way to maximise the amount they could borrow.

While buyers are supposed to have an investment in place to repay the debt, most buyers rely on the hope that the value of their house will increase over the mortgage term allowing them to cover the borrowing. In March this year Nationwide, like other mortgage lenders at that time, had already reduced the amount it would lend on interest-only mortgages to 50% of the property’s value.

This change means new Nationwide customers will only be able to take on mortgages on a repayment basis and follows a similar announcement by Royal Bank of Scotland which is stopping direct sales of interest-only mortgages; however they will still allow borrowers who are using a mortgage broker to apply for them.
The decision taken by Nationwide comes ahead of an announcement by the Financial Services Authority in which it is expected to tell lenders that when they assess ‘affordability’ on interest-only mortgages they should make sure the borrower would have been able to repay the loan if it had been taken on a repayment basis.

A spokeswoman for Nationwide has said if that rule is introduced it will make the assessment of these loans more expensive and the society has decided that it is not right to pass that cost on to members and so have withdrawn the product from the market.

It is thought that other mortgage lenders will follow Nationwide’s lead and pull out of the interest-only mortgage market.

Please contact Diana Lassey with any questions on buying and selling residential property on 020 7288 4766 or dianalassey@boltburdon.co.uk

25 September 2012 by

Married lawyers blow most of £3 million fortune on divorce

Judge Clive Million, sitting at London’s Civil Appeal Court last week, criticised two lawyers, Anna-Marie Harvey Kavanagh and her ex-husband Giles Kavanagh, for squandering most of their multimillion-pound fortune fighting each other through the divorce courts.

26 September 2012 by

Collins in the dock

It has been reported in the Standard today that the trial of Justin Lee Collins, who is accused of harassing his former girlfriend, is due to begin.

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