Approximately 2.6 million interest-only mortgages will become due for repayment within the next decade and while nine out of ten people will have a clear plan in place to repay their mortgage, it’s thought that 10 percent do not. That’s about 260,000 people!
The Financial Conduct Authority (FCA) have written a paper on the subject clarifying their stance. Here are their main findings and recommendations;
The FCA has published guidance to help set out what is expected of lenders and brokers when dealing with borrowers that have an interest-only mortgage. These measures include;
- setting out options for the borrower.
- firms must put in place a written strategy for dealing with interest-only loans they know of that might not have a strategy in place for being paid off at the end of the loan period.
- firms must make staff aware of this strategy and train them accordingly.
- firms must have a strategy for communicating their strategy with their clients.
- firms must assess affordability of new loans or extended loans when they are necessary.
- firms should have a plan in place which will result in existing customers having sufficient time to start putting in place alternative arrangements where necessary at the end of the interest-only loan.
- firms must monitor and manage the effectiveness of this strategy.
The FCA will be monitoring progress closely and providing guidance and assistance to firms where it is needed.
In addition to advice on existing interest-only mortgages, there is also the growing market of Lifetime Mortgages which are also, in large part, interest-only. The Financial Times have written on the subject and we have our own views here.
For more information or to speak to a Maidenhead Mortgage expert, contact us on 01628 507477.
Download our Free First Time Buyers Guide
Recent posts
The Financial Conduct Authority (FCA) has published a discussion paper about the future of the mortgage market in a bid to improve access for first -time buyers, self-employed, and those borrowing in retirement.
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.
Increase in zero-deposit mortgages in 2024
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.
Average savings by age in the UK
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.
Pros and Cons of Equity Release
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.
More information
Trusted by
