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Skipton Building Society is offering interest only mortgages on loans up to 80% of a property value.

These include a 1.79% two-year fix and 2.24% fiveyear – both fee-free on 60% loans – and a 2.29% five-year on 80% loans, with £1,495 fee.

Interest only loans are controversial. Many borrowers don’t understand they are only repaying interest and not reducing debt. Some have struggled to repay big balances at the end of terms as they had no financial plan in place to cover the original loan. Andrew Hagger, of consumer site Moneycomms.co.uk, says: “Interest only mortgages have a bad reputation because of the way they were sold and marketed. For some, it was the only way they could afford to buy, but some of the lending was reckless.

“It’s good to see a new lender in this market providing an affordable option for some customers.”

Other lenders offering interest-only mortgages include Halifax, Barclays, Santander and Leeds Building Society.

They have strict lending criteria and offer deals on varying loan sizes from 50% of property values.