Interest only Q&A's

A. To ensure that we continue to lend responsibly, it's right that we should check that the client has made appropriate arrangements to be able to repay their mortgage at the end of the term.

A. Evidence must be provided for all mainstream applications submitted through Halifax, Birmingham Midshires, Intelligent Finance, Scottish Widows, and Lloyds TSB Scotland. The same process applies to mainstream applications submitted directly or through the branch channel.

A. Yes. The new process must be followed if any part of the mortgage is on an interest only basis.

A. You are still able to do interest only mortgages with us. This process will confirm the existence of the repayment plan outlined on the application form; it will not review the advice given on the repayment plan.

A. These are listed on our website - choose Criteria then Interest only.

A. Evidence can be sent by either post or fax. the fax number is 0845 603 9009, please remember to ensure all the documentation has the mortgage account number quoted on it.

A. We need a copy of the document, which does not need to be certified. Please do not send in the original.

A. Yes, the same process applies to a buy to let portfolio as when sale of other residential property is chosen as the repayment plan.

A. If acceptable evidence cannot be provided, we will be unable to proceed to offer on an interest only basis.

A. No, there are no alternative documents to those on the acceptable list. If your client does not have the information, they may need to ask the provider of their pension/endowment/ISA etc for a duplicate statement.

A. If the opening statement for your client's ISA provides all the information listed below then it will be acceptable as evidence.

• Be for an existing repayment plan from the acceptable list.
• Clearly display one or both of the applicants names with no other third parties involved, e.g. a second home owned by an applicant and their parents is not acceptable.
• Clearly display the date (within last 12 months) and, where applicable, the current/projected value.

We will be unable to proceed to offer on an interest only basis without evidence of the repayment plan your client intends to use.

Alternatively, your client also has the option to proceed on a capital & interest repayment basis and convert to interest only at a later date. The conversion to interest only would be subject to the repayment plan being acceptable.

A. We are unable to update the Halifax Intermediary Online system until later this year. We have been clear about the repayment plans we now accept in our communications and on our website. If you do choose an unacceptable repayment plan by mistake, we will try and place the valuation on hold before it is carried out. If we cannot do this and the application cannot proceed on a capital & interest repayment basis or with an alternative repayment plan then we will refund the valuation fee.

A. Yes, a customer can use as many repayment plans as they wish provided they are all on the acceptable list. Please send all the repayment plans to us when you submit the application so we can check them all at the same time.

A. We need to establish ownership of the property, the valuation and the amount of any debt outstanding. You will need to send us a completed Interest Only - Other Property Details form and, if there is a mortgage on the property with a lender outside the Lloyds Banking Group, you will also need to send us a mortgage statement dated within the last 12 months.

Some checks can be made on our own systems but please note that:

• Ownership is usually established through a Land Registry check, however if we are unable to verify this we may request a solicitor's letter confirming the details.
• If we are unable to establish the value of the property the client will have to arrange their own valuation at their expense, either through Colleys or via another RICS qualified valuer.
• If my client contacts their endowment/pension provider for a statement but it will take six weeks to arrive, and completion is set for three weeks, what will you do?
• The repayment plan must be checked before we can issue a mortgage offer. However, the client has the option to proceed on a capital & interest repayment basis and convert to interest only at a later date. The conversion to interest only would be subject to the repayment plan being acceptable.

A. This is just another check that we will do within our standard processing so it will not affect our typical lead times.. The only exception to this is where the repayment plan is sale of other residential property; the checks for this can take a bit longer.

A. We will contact both you and your client to let you know if the evidence received is acceptable or not. Where the repayment plan is inadequate, you will need to discuss how to proceed with your client.

Examples of the options available to your client include:

• Taking out a new repayment plan to cover the shortfall
• Amending the application to £XXX on interest only and the remainder of the loan on a capital & interest repayment basis
• Amending the application to take the full loan on a capital & interest repayment basis

A. The decision is final and cannot be appealed.

A. We will remind the client on a regular basis of their responsibility to ensure that they can repay their mortgage at the end of term. Periodically, we may ask to check the repayment plan.

A You must send us a signed Declaration of Intent form for your client's existing interest only debt. The Declaration of Intent form can be found on our website - choose Literature then Mortgage literature.

You must also send us evidence of the repayment plan that your client intends to use to repay their further advance at the end of the mortgage term. A list of the acceptable repayment plans and the evidence needed for each are listed on our website - choose Criteria then Interest only.

A You must send us a signed Declaration of Intent form for your client's existing interest only debt. The Declaration of Intent form can be found on our website - choose Literature then Mortgage literature. We will be unable to accept a product transfer application without a completed declaration.