Tuesday, 29 April 2008

Abbey lending clarified

So after Abbey's announcement on the tightening of IO mortgage criteria


I thought I best run through some scenarios with them.

As usual it takes forever to get through on their phone system and the person you speak to rarely can answer any questions, however after around half an hour on an 0870 number I think I am there.

case 1 - if you have an existing interest only Abbey mortgage with no investment plan to repay the loan (madness) then Abbey will let you take a new deal and will not restrict you to the 50% LTV they announced.

Now Abbey will not actually check if you have an investment plan in place, they will trust that you do. So in fact, if you are willing to lie. you can say you have an investment plan and will be subject to a 75% LTV limit not 50% LTV.

case 2 - if you have a repayment mortgage and bought at 90% LTV and your deal ends, apparently Abbey have an internal system for determining your property value. So if they value your property at less than you bought it for, you are likely to be at 95%/100% or more. There will be no deals available for you and you will only be offered the standard variable rate which I believe is 7.84%.

Personally I cannot believe that Abbey would not have some sort of deal available if you were an existing borrower, but not according to their retention team.

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