Are you sitting on an Interest-Only Ticking Timebomb?Are you sitting on an Interest-Only Ticking Timebomb?

  • By Caz Blake-Symes
  • •
  • 09 Feb, 2018
  • •

Call Bristol, Bath or Exeter Mortgages Online for Expert AdviceCall Bristol, Bath or Exeter Mortgages Online for Expert Advice

Hundreds of thousands of homeowners could be at risk of losing their homes by ignoring how they will pay off their mortgage, a regulator has warned. Nearly one in five mortgage-holders has an interest-only home loan, meaning they would need savings or other funds to pay a final lump sum. The Financial Conduct Authority (FCA) said the end of these mortgage terms would peak in the next 10 to 14 years.

 Interest-only deals allow borrowers to pay off the amount borrowed only when the mortgage term ends, usually after 25 years, but there is concern that a host of homeowners do not have plans in place to pay the final bill. The FCA said that 1.67 million full interest-only and part-capital repayment mortgages were still outstanding, representing 17.6% of all mortgages in the UK. One peak of these final bills has come in the past year or so, for those who took out endowment policies in the 1990s and 2000s.

Less affluent, middle-aged homeowners who often converted to interest-only deals in 2003-09 - who are concentrated in the South West, East and North West of England, as well as London and the West Midlands - will see their final repayment demand come in 2027-28. The regulator said that lenders had improved their communications with customers at risk since its initial report on the issue five years ago.

What are your options…

  • Some believed that they had an adequate repayment plan in place, while others were simply burying their head in the sand.
  • Some had little trust in their lender, so were suspicious of the letters reminding them to have a repayment plan in place.
  • Borrowers are urged to talk to their lender or an Independent Mortgage Broker as early as possible, otherwise they would restrict their options over time of paying off their mortgage.

What the experts say ..

"We are very concerned that a significant number of interest-only customers may not be able to repay the capital at the end of the mortgage and be at risk of losing their homes," said Jonathan Davidson, executive director of supervision at the FCA.

Hannah Maundrell, from comparison service Money.co.uk, said: "You may be able to remortgage your property, extend your mortgage to give you time to raise the money to pay it back or look into taking out another mortgage from a different lender. If you're at risk of losing your home, there are government schemes that could help..”

How Bristol, Bath and Exeter Mortgages Online can help…

There are a number of options that we can help you with.

  1.  Keep calm and take advice before making any rushed decisions.
  2.  Call us today for a FREE no obligation consultation with one of our Expert Advisers.
  3.  We can look at your existing mortgage and options may include,

  • Restructuring
  • Changing to another lender
  • Changing to a repayment mortgage
  • If you are over 55 an Equity Release plan may be an option.

If you would like to talk to us about your Interest-Only mortgage or any Mortgage or Protection queries, please call us to book your FREE consultation.

www.bristolmortgagesonline.com  Tel 0117 325 1511

www.bathmortgagesonline.com     Tel 01225 584 888

www.exetermortgagesonline.com  Tel 01392 690 888

 

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