The society’s part and part interest only mortgages allow clients to borrow up to 75% LTV with a maximum of 50% on interest only and the remainder on capital and repayment.
John Coffield, head of Paradigm Mortgage Services, said: “In today’s mortgage market, flexibility for borrowers is not always apparent within the product space however with innovations like the part and part interest only mortgage from Leeds, advisers now have an opportunity to offer flexible solutions and to target specific borrower groups who are currently under-served.
“This Part and Part product could therefore be a suitable option for high net worth borrowers who are asset rich and looking to make more of their current investments and it could be used by interest only remortgagors who may have taken out their product a number of years ago, now have sufficient equity and can begin paying off the capital without the payment shock.
“It could also be appropriate for those endowment holders who have a shortfall and want to convert a portion of the mortgage to capital and repayment.
“All these borrower avenues can now be explored by Paradigm members who might not previously have had a product option suitable for these specific clients.
“It is particularly pleasing to be working with Leeds on this exclusive product – a mutual which is often at the forefront of product design and is absolutely committed to the intermediary sector.
“Our expectation is that members will warmly welcome such a product and we will be delivering further exclusive, Paradigm-only product offers over the course of the year.”
Martin Richardson, general manager, business development at Leeds Building Society, said: “Our new part and part interest only deal offers borrowers the ability to start reducing the capital they owe in a manageable way, without the payment shock of moving to a full repayment mortgage.
“We’re seeing strong demand from remortgagors, many of whom will have taken out interest only loans at the peak of their popularity in the mid-2000s.
“These borrowers may have an endowment shortfall or have yet to reduce the original amount of their loan.
“This proposition will be attractive to a wide range of customers and is not restricted based on minimum income requirements, and may also appeal to high net worth borrowers as part of a wider investment strategy.”
The exclusive product available to Paradigm members is a 2-year discount offered at 2.35% (SVR less 3.34%) up to a maximum of £1.25m (65% LTV) and £1m (75% LTV). It comes with cashback of £300, a free standard valuation up to £560, and fees-assisted legals for remortgages. The arrangement fee is £199.
The product is available to purchase or remortgage borrowers in England, Scotland, Wales and Northern Ireland and comes with no higher lending charge or booking fee. Borrowers can also make 10% penalty-free capital overpayments each year, interest is calculated on a daily basis, and there is a tapered early repayment charge of 3/2% of the amount redeemed over the two-year period.
Leeds Building Society believes this type of part and part interest only mortgage is suitable for a including high net worth individuals, interest-only remortgagors and ‘endowment shortfall’ borrowers.
