Last updated: 14 May 2014
This guidance is for: Lenders
In 2010 the CML started working with members to identify and mitigate repayment and conduct risks associated with existing interest-only mortgages, which may arise in particular circumstances. The CML’s interest-only toolkit is intended to help and inform lenders to develop policies and actions related to existing interest-only mortgages.
The toolkit is not prescriptive – rather it sets out a framework which we believe will allow members to develop a strategy which is appropriate to their business model and, crucially, helps them to meet the needs of their current interest-only customers.
The options set out in the toolkit only apply to residential owner-occupied mortgages, where the property is the borrower’s primary home. As such buy-to-let, second homes and equity release mortgages are excluded.
The content of this toolkit has been reviewed to reflect the rules which will come into force on 26 April 2014 as a result of the Mortgage Market Review (MMR) insofar as they impact the interest-only back book. The overall content will also be reviewed to reflect the outputs from the FCA’s thematic work on the maturity of interest-only mortgages. The toolkit is a living document and will continue to be reviewed and updated when necessary.