Return of interest-only

YORKSHIRE Building Society is bringing back interest-only mortgages — years after they almost vanished over fears customers may be unable to pay their debt.

The Yorkshire already offers interest-only mortgages through brokers, but plans to start selling them directly via its 240 branches and agencies within months.

Customers can borrow a lump sum and make only the monthly interest payments. The initial amount borrowed is then paid back at the end of the term.

On a £150,000 loan at 4 pc taken over 25 years, for example, you would only pay £500 a month, compared to £792 with a regular repayment mortgage.

Mike Regnier, chief executive of the Yorkshire, says: ‘For certain types of customers, particularly those with more variable income, interest- only mortgages are absolutely the right choice.’