The Financial Conduct Authority (FCA) has warned homeowners that they risk losing their homes if they continue to ignore how they will repay their interest only mortgage when their mortgage term ends.
Nearly one in five home owners have interest only borrowing without a repayment vehicle in place, such as savings or other means to repay the final lump sum. The FCA quoted that 1.67 million full interest-only and part-capital repayment mortgages were still outstanding, representing 17.6% of all mortgages in the UK.
The majority of these mortgages are expected to reach there scheduled end in the next 10 to 14 years, but despite lenders actively communicating the risks, many borrowers are choosing to ignore such letters.
So why are borrowers ignoring the risk warnings? Feedback found that many still believe that they have an adequate repayment plan in place, while others were merely burying their head in the sand.
The FCA has encouraged all interest only borrowers to review their position to ensure they have sufficient means to repay their mortgages.
If this affects you then all is not lost, there are options available to you and the sooner you act the better.
You could potentially remortgage onto a capital and interest repayment basis and look to extend your mortgage term, to give you time to raise the money to pay it back or look into taking out another mortgage from a different lender.
We appreciate that the thought of moving your mortgage is often perceived as a big step and sometimes simply ‘not worth the hassle’. Mortgages can be transferred easily between providers and in some cases will cost you nothing. So you may have nothing to lose, but everything to gain!
At David Allen Financial Services our whole of market mortgage advisers search hundreds of mortgages to find the best deal for you but, importantly, only recommend a mortgage where it is suitable. We have the expertise and experience of dealing with complex cases such as interest only mortgages and have good working relationships with many lending managers within financial organisations to source the mortgage you need.
Stop burying your head in the sand and contact us today on 01228 711881 to arrange your FREE mortgage review.
Your home may be repossessed if you do not keep up repayments on your mortgage. The Financial Conduct Authority does not regulate some products such as Buy-to-Let mortgages.
Source: www.bbc.co.uk/news/business-42872432 30/01/2018
Posted: February 1st, 2018