Nationwide has announced it is adding interest-only to its mortgage range, initially offering the product just through brokers.

The latest announcement followed on from the society’s re-entry into the residential interest-only market after eight years, to ensure continued support to the mortgage market while giving more flexibility to homeowners, Nationwide said.

The product will be offered for remortgages only at a maximum of 60% LTV and will require a minimum equity of £300,000 in London, £250,000 in the South-East or £200,000 across the rest of the UK. The society added that the rates are the same as its capital repayment mortgages, and start from 1.29%.

Nationwide director of mortgages, Henry Jordan, said: “As the UK’s second largest lender, it is natural that we continue to look at ways we can support the mortgage market. At almost 7%, interest-only remains an important part of the market, which is why we are launching this new product, initially via brokers.

“During these unprecedented times, it is important to continue offering a variety of options and flexibility to homeowners and, by adding interest-only, we are providing access to our standard product range to applicants with good equity.”

In terms of repayment, Nationwide revealed this will be restricted to the sale of the main residence only – with part interest-only and part capital repayment mortgage also allowed, subject to the same criteria.

The society added that anyone applying for the interest-only product will need a minimum income of £75,000 for sole applications – or £100,000 if joint – and that the product will come with a maximum term of 25 years, or retirement age if that is sooner.

London Money director, Martin Stewart, commented: “I think this is a great initiative from Nationwide and brings them in line with the other major high street lenders in the UK. The interest-only market has evolved a lot over the past 10 years, and in doing so, we are now focusing on the opportunities where interest-only is a viable alternative for the borrower.

“I know Nationwide, as a responsible lender, has spent a lot of time on its due diligence to make sure its offering is the right one. I believe that it is, and this new initiative should see them begin to challenge their competitors in what is a very active part of the market.”

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