Nottingham Building Society has introduced sale of mortgage property (SOMP) as an approved method of repayment for interest-only mortgages.
The society says this opens up new opportunities for brokers and provides borrowers with increased flexibility and access to a wider range of options.
Interest-only mortgages have become a popular choice for many borrowers, offering lower monthly payments by paying only the interest accrued on the loan.
Various repayment methods are traditionally available, including pension plan lump sums, stocks and shares ISAs and the sale of investment properties or second homes.
The Nottingham is now including SOMP as an approved repayment method following the end of the interest-only mortgage term.
It says this allows borrowers to sell their current property and use the proceeds to pay off the mortgage, while also providing the opportunity to purchase a smaller property.
The flexibility and financial benefits of SOMP create a valuable avenue for borrowers seeking alternative ways to meet their mortgage obligations, it adds.
Nottingham Building Society has a maximum loan-to-value (LTV) of up to 80% for interest-only mortgages.
Under the new offering, for borrowers who choose SOMP as their primary repayment method, The Nottingham sets the maximum LTV at up to 60%.
Borrowers need to have at least £200,000 equity in their property (or £300,000 in London and the South-East).
Borrowers can use more than one repayment method, which allows them to still go to 80% LTV on interest-only, using one of The Nottingham’s other stated repayment vehicles or SOMP up to 60% plus one of their stated repayment options.
Nottingham BS sales director Alison Pallet says: “The Nottingham remains committed to strengthening its relationships with brokers and empowering borrowers through innovative solutions and continues to evolve its services to meet the dynamic needs of customers effectively.
“We are always ready to adapt our offering to the changing demands of the market and economic climate, and this latest update will provide customers with a wider range of solutions that work for them.”
