With the recent announcement by the Nationwide to stop offering interest only to new borrowers, it is likely to mean that more lenders will follow suit, but there is a silver lining for brokers and their clients. According to Dave Pinnington, Business Development Director at V Loans, brokers who are able to offer secured loans for capital raising as an alternative to remortgaging will see business surge.
He said:
"The bell is tolling for the likely end to interest only as an alternative repayment method. For some time now we have seen a dramatic increase in the demand for secured loans from mortgage brokers with interest only borrowers who need to capital raise and protect their interest only mortgage at the same time.
"We are also well aware that a common practice deployed by mainstream lenders is to only approve further advance applications on the basis that all of their borrowing is converted onto a repayment basis, whilst others demand proof of repayment vehicles, even if the mortgage has been in place for years.”
"As the first charge market continues to limit the options available to clients, the secured loan sector offers a real alternative for brokers and their clients.”
