Coventry for Intermediaries has raised the maximum loan-to-value for interest-only mortgages from 50% to 75%. This shift significantly broadens borrowing capacity for investors and homeowners who prefer or require interest-only deals. Increasing the LTV by 25 percentage points opens the door to higher leverage, which can enhance cash flow but also raises exposure to market fluctuations.
The lender has also cut the minimum property value outside London and the South East from £300,000 to £200,000. This adjustment aligns with regional price differences and makes Coventry’s interest-only products accessible to a wider segment of the market, particularly in areas where property values are more modest. For investors, this means more opportunities to utilise interest-only mortgages in regional locations without needing to meet a high equity threshold.
Repayment vehicles remain flexible, including the sale of the mortgaged property itself. This continues to be a key consideration for interest-only borrowers, who must have a credible exit strategy. From a risk perspective, Coventry’s move suggests confidence in the stability of regional markets and the ability of borrowers to manage interest-only commitments at higher LTVs.
For UK property investors, this change is worth noting. Interest-only mortgages at 75% LTV can improve initial yield by reducing monthly repayments, but investors should weigh this against the risk of capital growth not meeting expectations. Our data shows that regional markets outside London and the South East have exhibited varied growth rates, so location and exit strategy will be critical when leveraging these new terms.
Source: Mortgage Strategy
