Under the new deal, Paradigm member firms will be able to access the two interest-only fixed rate products, offered at 60% and 75% LTV over a five-year term to 31st December 2021.
Both products can also be taken as interest-only part and part (P&P) which offers clients the opportunity to split their mortgage between both interest-only and full repayment. For 60% LTV this could mean the client opting for 35% interest-only/25% repayment, while at up to 75% LTV the combination of interest-only and repayment is the client’s choice but the interest-only element cannot exceed 60% LTV.
Leeds believe the interest-only P&P option can be suitable for a number of clients including: existing interest-only borrowers seeking to reduce the capital they owe without the payment shock of moving to a full repayment product; ‘endowment shortfall’ borrowers allowing them to cover the gap plus convert a portion of their mortgage to capital repayment; and ‘asset rich’ customers who may be looking to make more of their current investments.
The two five-year products are offered at 2.25% for 60% LTV, and 2.45% at 75% LTV. Each comes with a free standard valuation, fees-assisted legals for standard remortgage and an arrangement fee of £1,499. The maximum loan available is £1.25m up to 65% LTV and £1m up to 75% LTV.
All interest-only applicants must have a credible repayment strategy in place to repay the capital at the end of the mortgage term – this can include the use of equity after sale of the mortgaged property.
John Coffield, Head of Paradigm Mortgage Services, commented: “Just recently Leeds Building Society increased its maximum LTV on interest-only from 50% to 60% and we are therefore very pleased to be the first, and only, distributor to be offering these exclusive five-year fixed rate products to market through Paradigm’s member firms. The development of interest-only, and in particular, the part and part option to clients shows that Leeds is at the forefront of innovation in the mortgage sector and it is seeking to develop new products which fit a niche but can be applicable to a wide range of customers. Undoubtedly, existing interest-only borrowers and those with endowment shortfalls will be interested in products which give them both payment security over the long-term but also allow them to pay off some of their mortgage capital.
With these products, Leeds Building Society is looking after a relatively under-served part of the market and ensuring the ongoing rehabilitation of interest-only mortgages for suitable borrowers continues. We are sure our Paradigm member firms will see great value in these exclusives and we look forward to working with the society on these and other product opportunities.”
Jaedon Green, Director of Product and Distribution at Leeds Building Society, said: “We continue to refine our award-winning interest-only proposition and are pleased to be able to offer these fixed rate deals through Paradigm. The criteria improvements we’ve made, such as changing minimum equity requirements to take account of regional variations in property prices, offer greater flexibility and a more tailored service. We’ve made these changes to help more borrowers who are not well-served by the wider market as we respond to borrowers’ and intermediaries’ feedback innovatively and responsibly.”
