Lloyds TSB: Switching to interest-only mortgages stopped

October 30. Lloyds TSB who own Cheltenham & Gloucester will not allow anyone with less than 25 percent equity in their home to switch to pay just the interest only on their mortgages, the rules were brought in earlier this week.

Many people switch to an interest-only deal to reduce their payments in times like now when mortgage holders are struggling to find the money to keep up with their mortgage re-payments. However because paying the interest only on the loan does not pay off any of the loan itself, Lloyds TSB see this as a greater risk for them.

The decision by the bank comes despite being one of the lenders who are part of the governments £32 billion part nationalisation rescue. If the mortgage you hold with Lloyds TSB is worth less than 75 percent of your home’s value then you will be able to switch your mortgage to pay interest only.

Lloyds TSB have made it clear that if you were a borrower who flagged up that you are having difficulty with repayments then the option of interest only could still be a option, the bank has said it was a sensible move to stop homeowners slipping into negative equity whilst the house prices continue to fall.

Source: Telegraph bucket list the movie