Big changes for part and part mortgage criteria
To streamline and enhance its lending practices, Accord Mortgages has announced significant updates to its Part and Part mortgage criteria. These new criteria changes apply to borrowers looking at Part and Part mortgage loans who intend to sell the property at the end of the mortgage term or before. In this blog we will explore what a Part and Part mortgage is and how Accord’s new criteria changes can help you.
What Is A Part And Part Mortgage, And What Is Part And Part Mortgage Criteria?
A Part and Part Mortgage definition is quite simple. Instead of being just one sale mortgage, your mortgage is split into two parts. Standard mortgages are normally either capital repayment and interest (i.e. you pay off the loan with interest per month) or interest-only (i.e. you only pay the interest on the loan per month).
A Part and Part mortgage is split between interest-only and capital repayment. This is often done to bring the monthly repayments down on higher mortgage loans. For example, you could have a £1,000,000 mortgage and choose to put £750,000 on interest-only and £250,000 on repayment. As with a standard interest-only mortgage, you will still have the outstanding balance of the mortgage to pay at the end of the mortgage term, as you have only paid the interest incurred per month.
Accord Mortgages Part And Part Mortgage Criteria Changes
The key changes unveiled today by Accord Mortgages include a fundamental shift in the equity calculation that their underwriters use. In order to secure a Part and Part mortgage through Accord, you normally need a minimum equity level in your property. Previously, the equity requirement was determined solely at the time of application. However, under the new criteria, Accord Mortgages will factor in the Capital and Interest (C&I) component of the Part and Part loan throughout the mortgage term. This means that even people with properties of lower market value can potentially benefit from the Part and Part mortgage products.
Also, to ensure the financial stability and viability of the mortgage, Accord has introduced strict property value thresholds. By mandating a minimum equity of £250,000 at the end of the mortgage term, or £300,000 for properties situated in London, Accord are trying to reduce risk for both lender and borrowers.
Limitations To Part And Part Mortgages
There are however certain limitations within the revamped criteria. Part and Part lending remains off-limits for buy-to-let mortgages, to ensure that more owner occupiers are benefitting from property ownership rather than landlords. Additionally, sale of mortgaged property as a repayment strategy is capped at covering a maximum of 60% of the property’s value, ensuring a balanced and sustainable mortgage structure. Despite these restrictions, borrowers can still benefit from a maximum Loan-to-Value (LTV) ratio of 85% for Part and Part loans.
Interest-Only Loans And Part And Part Mortgages
For those opting for interest-only loans, the equity calculation remains unaltered, assessed solely at the time of application. Clients meeting the enhanced criteria for Part and Part lending can also take advantage of portability and variations, subject to standard lending rules.
Speak To A Part And Part Mortgage Broker
For more information on Accord Mortgages’ enhanced Part and Part mortgage criteria, prospective borrowers and mortgage brokers are encouraged to reach out to our brokers at Oportfolio Mortgages directly. We are whole of market mortgage brokers and our job is to help you get the most competitive deal and product for your circumstances. Call our team today. We are here to help you.
