Halifax is lowering the qualifying income needed for the sale of mortgage property (SOMP), bonus and cash repayment plans so the option is “available to more customers”.
The changes come into force from today.
SOMP is one of the acceptable methods of repayment for interest-only mortgages, so the customer is borrowing against the existing equity in the home.
For SOMP, including second homes, bonus and cash repayment plans the minimum income has reduced to £75,000 for a sole applicant, or one applicant on a joint application.
The minimum income for combined income on a joint application is now £100,000.
The maximum loan to value (TLV) available on interest-only with SOMP is rising from 50 per cent LTV to 75 per cent LTV.
For part interest-only and part repayment ending the minimum equity will be calculated at the end of the mortgage term, not at the point of application.
The limits for minimum equity at the end of mortgage are £300,000 up to 50 per cent LTV, £500,000 between 50 and 60 per cent LTV and £750,000 between 60 and 75 per cent LTV.
As an example, for a property value of £500,000, a loan of £375,000 at 75 per cent LTV would be available with up to £200,000 on SOMP to leave £300,000 minimum equity at end of term.
Brokers will receive a message where SOMP has been selected but the minimum equity requirement is not met.
All other SOMP criteria remains unchanged.
