I understand that many mortgage lenders are in the process of writing to borrowers who are only paying interest on their mortgages and not currently chipping away at the capital.
The letters are asking clients to review their plans on how they intend to repay their capital. Many clients have old endowment policies which may or may not be on target to repay the outstanding mortgage, some will be selling the properties and downsizing, thus using the equity to repay the loan and about 10% of the 2.6 million in question who need to repay their loans before 2043…..well they don’t seem to have a plan at all!
To my knowledge no lender has as yet come out and said what they are actually going to do with clients who have no means to repay the loan at the end of the term, or even published a list of possible options – most have said they will deal with each case on an individual basis.
As I see it, lenders have a number of roads down which to go:
One thing clients must not do is nothing!
I would urge any borrower who is only paying interest to contact their lender and have the conversation about a repayment strategy. Different lenders have very different rules, so I would urge anyone whose existing lender can’t help them not to panic, but to contact an Independent Mortgage Adviser who can look at switching their mortgage to another lender who may be able to make the figures work.
If you have a questions, please email team@mortgagerequired.com or telephone 01628 50747.
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