Coventry interest only mortgage LTV change.

The Coventry Building Society has reduced its maximum interest only mortgage loan to value level from 75 per cent down to 50 per cent.

The interest only mortgage criteria change came into effect on March 22. First-time property buyers will no longer be approved for an interest only deal, and the building society will no longer offer interest-only deals over a maximum loan level of £500,000.

The lender also advises that neither the sale of property or downsizing will be classed as an acceptable future repayment vehicle.

A spokesperson for Coventry commented saying that following interest only lending criteria changes by other mortgage providers, the Coventry decided to reduce their maximum LTV to 50 per cent.

The spokesperson added that Coventry restricted interest-only lending for first-time property buyers because as a responsible mortgage lender they want to ensure they encourage responsible borrowing.

The interest only change applies to offset, residential and further advance applications and has been made to bring Coventry's lending policy in line with the general mortgage market. It has been confirmed that there are currently no plans to amend the lender's buy-to-let policy.

Santander were the first UK lender to restrict interest only mortgage lending to 50 per cent. Lloyds, Halifax, Chelteham & Gloucester have all amended their criteria and now say cash savings are no longer considered a suitable repayment vehicle for clearing the capital debt.

The Coventry decision followed on from an early announcement by the Nationwide who has also cut its interest only mortgage LTV to 50 per cent.