Abbey for Intermediaries (AFI) is making changes for new residential mortgage applications on 28 March.
These changes include new rules for interest-only applications.
For all new applications on an interest only basis, AFI now requires the completion of a new Interest Only submission form and keep the form and supporting evidence on file for two years from completion.
It will now only accept the the sale of the property or a buffer of £100,000 between the current property value and the total loan as suitable investment vehicles.
For investments, AFI will use the following:
* endowment/mortgage ISA – the midpoint projection at maturity, they must be held for at least 12 months
* current cash value of Stocks and Shares ISA, Investment Bond, OEICs and Unit Trusts – no growth projection or future funding predictions allowed for, they must be professionally managed and held for at least 12 months
* the total value of the investments must be at least equal to the total loan
* Mixing the sale of the property and investments is not possible.
AFI will no longer accept pensions, sale of other properties, bonuses or cash savings as suitable investment vehicles.
