Lloyds TSB Blocks Switch for Interest-Only Mortgages
Lloyds TSB has blocked borrowers’ chance to switch to interest-only agreements despite their recent promise to the Government that they would support homeowners. The interest-only mortgage’s lower monthly repayments are frequently a lifeline for borrowers who are hard-pressed.
Lloyds TSB, which is one of the lenders who is involved in the £37 billion part-nationalization rescue by the Government, created new rules earlier in the week while the numbers are showing that repossessions have increased by 71% during the 3 months ending June, which prevents the borrower that has a high loan to value from being able to pay even the interest on their mortgage. Only the borrowers who have mortgages that are valued less than 75% than their home are allowed to make the switch to an interest-only deal, in which they don’t have to repay the home loan’s capital as well.
Switching to an interest-only agreement from a repayment loan is an option lenders can offer to a borrower who is having trouble meeting the repayments to keep their home, which may save the borrower over £200 per month if they have a loan of £150,000.
In a note to brokers, Lloyds TSB outlined a large number of tight new criteria for lending, saying that the existing customers who have borrowed from them with a repayment deal can’t switch their method of payment to interest only. Also, last night, Lloyds TSB appeared to backtrack when a spokeswoman said that if the borrower is having financial difficulty, then the option of switching to an interest-only deal is still open.
Go to www.lloydstsb.com
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