Halifax tightens interest-only criteria

Halifax Intermediaries will now require all residential interest-only mortgage applicants to provide evidence of their repayment vehicles prior to the offer stage.

Lenders notified intermediaries of the change, which will take effect from 31 May, via e-mail yesterday.

Full checks of repayment vehicles are already in place across Lloyds Banking Group’s branch network and through its BM Solutions intermediary brand.

Existing customers will be required to provide evidence of a suitable repayment plan if they want to convert all or part of their mortgage from repayment to interest-only.

Over the past year, Lloyds has made a number of changes including tightening its list of acceptable repayment vehicles, increasing the price of interest-only loans and restricting the use of interest-only mortgages to people borrowing less than £500,000.

Last month, Lloyds increased the amount it will lend on an interest-only basis from £500,000 to £1m for borrowers taking out a mortgage via its branch network.

A spokeswoman for the bank said: “This move aligns Halifax Intermediaries’ interest-only policy with the approach for mainstream lending across all brands and channels within the group.

“It is important that can see that customers looking to borrow on an interest-only basis have an appropriate repayment plan in place.