I think anyone with an interest only mortgage without a repayment vehicle, will by now have a letter from their lender, warning them to make arrangements to repay their capital.
Nowadays, banks and building societies are reluctant to give mortgages to customers unless they pay capital as well as interest, but back in the day, interest only mortgages were as common as muck!
Borrowers whose endowment policies have gone by the wayside years ago, have been well warned to start making capital payments, but many interest only borrowers have simply done nothing.
The banks are starting to shape a solution to this problem in the form of a “Lifetime Mortgage.” In simple terms, older homeowners who cannot find a way of paying off their debt will be allowed to pay only the interest on their loans until they die, allowing them to stay in their home.
In return, borrowers would agree to give their house to their lender, rather than family, when they die. The bank would then sell the property and take the outstanding debt before passing the remaining proceeds to the estate.
Santander have announced that they will offer 'lifetime mortgages' from next year and other lenders are likely to follow suit.
Hopefully, once this batch of borrowers has been sorted, the next batch (the 40 something’s who all have to work well into their late 60s to get a pension) will all be fine, as they will have paid their loans back under the current rules. The 30 something’s however, won’t need to worry about having a mortgage when they retire, as they will presumably have to work until they fall dead at their desks anyway!
For more information or to speak directly to a mortgage advisor please contact us on 01628 507477.
Ever wondered where the most reasonably-priced towns for families to buy are? Property company, Zoopla has identified the top 10 towns for families to live in the UK by looking at the most affordable towns, and how many people are looking in that area.
7 days ago
There was a 32% increase last year in 100% loan-to-value (LTV) mortgages which are mortgages that require zero deposit. According to a recent report by chartered accountants and business advisers, Lubbock Fine, the reason behind this is buyers simply struggling to save enough for a deposit.
8 days ago
Many people are quite private when it comes to what is in their bank account. In this short blog, we look into what Brits have saved by age group.
Research from buy-to-let lender, Landbay, shows that UK landlords are looking at raising rents ahead of the Renters' Rights Bill which is due to come into force this year.
Data shows landlords could miss out on green mortgages due to expired energy performance certificates.
Buying a house is a big deal, and where you are planning to buy will make a difference financially. In this short blog, we look at the most affordable and most expensive areas and how much you need to be earning to buy in there.
20 May 2025
Equity release is a type of mortgage that allows homeowners 55 and over to access money from their property's equity without having to leave their home. This is done by securing a loan against the house which is usually repaid by selling the property when the borrower passes away or has to move into long-term care.
19 May 2025
It’s important to ask questions about the property you are interested in before taking that step to make an offer. A little probing can make all the difference between buying your dream house or something that requires a lot of work.