Arranging masses of Interest only mortgages seems like a dim and distant memory, but 25 years on from the endowment boom there are still around 4 million of them around.
In some cases, the endowments have long since been cashed in to pay for a holiday / car / outstanding debt, but no attempt has been made to repay any of the capital.
Lenders have for a long time been trying to tempt / coax / shove clients away from interest only and on to a repayment mortgage, but different lenders have very different ways of dealing with those clients who cannot or will not change.
For example, one lender who has hit my radar charges 5% to interest only borrowers whilst offering nearer 2% to others. It would appear that some lenders are applying the same rules to everyone regardless if they have a suitable repayment strategy to pay off their loans or not.
Unfortunately, most interest only mortgage holders are over 50 and their mortgage options are more limited, for example only recently some of the smaller building societies have reduced their mortgage cut off ages from 75 to 70.
When borrowers come to the end of their fixed rate period, lenders tend to use this as an opportunity to apply their new interest only rules. We have had a steady stream of calls from worried borrowers who have seen their payments increase overnight by anything up to £350 a month.
I would advise anyone who is worried about being on interest only to speak to their existing lender to see if they can come to an arrangement to start repaying their capital. If your lender cannot come to a manageable arrangement, then speak to an Independent Mortgage Adviser who will be able to look at the whole market to see if another lender has a more manageable solution.
For more information or to speak to a mortgage adviser please contact us on 01628 507477.
Recent posts
Best UK Mortgage Rates this Week
6 days ago
Here are the lowest fixed mortgage rates of the week, available to first-time buyers, home movers, buy-to-let, and those remortgaging.
Call us for more information: 01628 507477 or email: team@mortgagerequired.com.
The UK mortgage market is seeing lenders withdraw deals and hike mortgage rates amid the escalation of conflict in Iran. This isn’t great news for borrowers, with the average rate for a two-year fixed deal sitting above 5%.
Statistics now show that those looking to purchase a property would have to save a deposit bigger than their annual gross pay.
Analysis from the Office for Budget Responsibility (OBR) shows that those looking to buy their first home could face a sharp increase if house prices follow the latest predictions, as Coventry Building Society suggests.
Around 40% of homes are cheaper to buy than rent
19 days ago
According to Zoopla, four in 10 homes are now cheaper to buy with a mortgage than to rent due to lower-cost mortgages - a sign that ownership is becoming more affordable.
World Sleep Day Tips
25 days ago
There are many people who struggle with getting a good night’s sleep. Having poor sleep hygiene can be the reason for bad sleep quality in adults. Sleep hygiene refers to habits that can help you sleep better.
Here we have shared some tips to create a healthier sleep.
What you need to know about remortgaging
27 days ago
If your current fixed rate is due to come to an end within the next six months, you will want to start thinking about the options available to you.
Nationwide is the first lender to allow mortgage deeds to be signed electronically and without the need for a witness.
More information
Trusted by
