One of the big changes in the market is that lenders are requiring large deposits to allow you to go onto an interest only mortgage. Historically interest only mortgages were available to everyone disregarding deposit levels however over the years this has changed. Over the last couple of years it has been pretty standard for a 25% deposit to be required to go onto interest only however these levels have increased by some lenders to 50%.
A repayment mortgage will guarantee that the mortgage is paid off by the end of the term however an interest only mortgage is only paying the interest so at the end of the term the mortgage amount owed will still be the same. This is a big concern for mortgage lenders as at the end of the loan they will want the mortgage to be repaid and is one of the reasons why there has been a reduction in interest only mortgages.
To take out an interest only mortgage you have to prove that you have a method to repay the mortgage through an alternative investment vehicle such as an ISA. These checks are also becoming stricter to ensure that your investment vehicle is realistically going to be able to pay off the mortgage.
This is just one way in which finding the right mortgage has become more complicated due to the changes in criteria. There are also many other factors such as employment status, proof of income, affordability and credit status.
It is wise to get advise if you have any doubt about whether or not you are applying for the right mortgage because a mortgage broker can ensure that you are not wasting your time and credit checks applying for a mortgage that you may not be able to obtain. They can also ensure that you are getting the best deal on the mortgage market.