Clydesdale Bank has relaxed its interest only mortgage lending policy.  

The high street bank has lifted the maximum loan-to-value for part capital and interest, part interest only to 85% LTV, for loans up to £1.5m. 

It says up to 75% LTV can be taken on an interest-only basis, while any extra borrowing up to 85% LTV is taken on capital and interest terms. 

The lender also tells brokers that it has ditched its 70% LTV restriction for downsizing on loans above £1.5m. 

This means downsizing can now be used up to 75% LTV on an interest-only basis. Any borrowing above 75% LTV must be taken on capital and interest terms. 

The bank has also eased its affordability assessment for interest only and part & part loans. 

It says: “Instead of calculating affordability as if the loan were capital and interest, we now use the actual repayment type, so we could lend your clients more.” 

The firm has made other changes to its interest only criteria, which include: 

• It no longer allows debt consolidation on interest only loans, unless it was used for property improvement or repair. Instead, debt consolidation needs to be on the capital and interest part of the loan

• It clarifies that when lending on a second home, it does not require a minimum amount of equity, which is the case when a client is downsizing from their main residence 

Clydesdale Bank & Virgin Money head of intermediary sales Richard Walker adds: “We’re committed to evolving our support to meet customer needs, and this enhancement will give borrowers using interest only or part & part more options to align their mortgage strategy with their broader financial goals.”