Interest Only - Sale of the security property

The sale of the security property is an acceptable repayment vehicle where:

The applicant intends to sell their home (the mortgage is secured on) to repay the capital at the end of the mortgage term.
The interest only mortgage is secured on the property the applicant plans to sell.
The application meets the criteria below (applies to residential applications only excluding Rate Switches).
Where the applicant is applying for a residential Rate Switch the ‘sale of the security property’ can be used as a repayment vehicle. These applications will not be subject to any criteria checks.
The applicant has read and signed the ‘Sale of the security property – Customer Declaration’ – see below.

Where the repayment vehicle is not ‘sale of the security property’ please refer to Interest Only Criteria for more information as different criteria applies.

Residential Interest Only Criteria – Sale of the security property		Additional information
Maximum LTV	60%	The maximum LTV on interest only. This is based on the loan amount excluding any fees. A further 15% may be taken on a repayment basis taking the overall LTV up to maximum of 75%.
Minimum Equity	£300k	The minimum equity remaining in the property at time of application, subject to valuation. This is based on the loan amount excluding any fees. Acceptable examples: Property value £400K with an interest only loan amount of £100K = £300K equity (25% LTV) Property value £900k with an interest only loan amount of £540k (60% LTV – max on interest only) and repayment loan amount of £60k = £300K equity (Total 66.7% LTV)
Maximum Term	30 years	The maximum term on completion. This also applies to any part of the lending on a repayment basis. The term of the repayment lending cannot exceed the term of the interest only lending. Acceptable examples: 30 year term on interest only and 30 year term on repayment. 30 year term on interest only and 20 year term on repayment.
Maximum Age	70 years	The maximum age at the end of the term, or the applicant’s anticipated retirement age, whichever is lower. This also applies to any part of the lending on a repayment basis. The term of the repayment lending cannot exceed the term of the interest only lending.
Lending into retirement	No	Not acceptable where the customer is already retired or the mortgage term will extend beyond the applicant’s anticipated retirement age or their 70th birthday, whichever is lower. This also applies to any part of the lending on a repayment basis. The term of the repayment lending cannot exceed the term of the interest only lending.
Minimum Income	£75k Sole and/or £100k Joint	Sole applicants - Minimum income required of £75K* Joint applicants – Minimum income required of £75K* for one applicant OR a combined minimum income of £100K for both applicants. Acceptable examples: Joint – Applicant 1 £75K and Applicant 2 £10K Joint – Applicant 1 £50K and Applicant 2 £60K Based on the gross amount used for affordability e.g. 100% of Basic Salary, 60% of Overtime.
First Time Buyers	Yes	Available to first time buyers.
Second Homes	Yes	Available on a second home where the interest only mortgage is secured on the property the applicant plans to sell.
Studio Flats	No	Studio flats are not acceptable.
Affordable Housing Schemes	No	Not available on applications involving Shared Ownership, Shared Equity, Help to Buy and Right to Buy schemes
Debt Consolidation	Only available on a repayment basis	Any part of the lending being raised for Debt consolidation must be on a repayment basis only.
Other	The security property must be in the name of the applicant(s) named on the mortgage. The security property must be based in the UK. The intended sale date of the security property must not exceed the term. Only the sale of the security property can be used to cover the total interest only amount. This cannot be used in combination with any other repayment vehicles. Interest only lending is not available for foreign nationals without permanent rights to reside.

Sale of the security property – Customer Declaration

Our Regulator places a significant responsibility on the lender to ensure interest only loans have a credible repayment vehicle. For complex transactions, to support you and the customer we use digital signatures.

The declaration can be signed and submitted digitally using our Docusign process. Use the ‘Sale of the Security Property – Customer declaration’ form in Guides and Forms.

Printed versions of the Docusign declarations with wet signatures, or any other form of digital signatures are not acceptable.

Please see our Residential FAQs page for more information.