Borrowers taking the Low Start Mortgage will have an initial 3-year fixed rate on interest-only terms with affordability based on capital and interest to ensure payments are sustainable for the life of the loan.
Fred Sharp, head of mortgage distribution at Clydesdale Bank, said: “There is a clear need for interest-only mortgage products in the marketplace but this has to be in the right circumstances and with the right support, both financially and advisory.”
A spokesman for Clydesdale said by guaranteeing that capital repayment payments are affordable from day one the borrower will have flexibility around other costs such as furnishing and decorating and no “payment shock” at the end of the three years.
Sharp added: “Our new approach addresses both the need and the concerns associated with interest-only mortgage lending. We have retained the option while controlling the availability and launched a new product that takes the best of both interest-only and repayment mortgages to support borrowers looking for a new home.”
Low Start rates
60% LTV 3.09% £999 ERCs 5%, 4%, 3%
70% LTV 3.39% £999 ERCs 5%, 4%, 3%
75% LTV 3.79% £999 ERCs 5%, 4%, 3%
80% LTV 4.49% £999 ERCs 5%, 4%, 3%
Clydesdale will continue to offer interest-only mortgages through private and broker channels for loans between £300,000 to £1million.
Where loans are over £1million, interest-only may be available for part and part lending up to 60% loan to value.
