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

Selling up? It’s important to make your house as appealing as possible to potential buyers. Good decorating can help with first impressions, and increase the perceived value of your property.

With the cost of living affecting so many of us, we have made a list of budget-friendly activities and ideas for you.

Moving soon? It's never too early to get organised! Be prepared and avoid unwanted stress by checking out our list of tips to get you ready for moving day.

Inflation simply put, is the increase in the price of something over time. The Office for National Statistics (ONS) tracks the prices of hundreds of everyday items and these items are updated to reflect shopping trends.

We are often asked if it's good advice to consolidate “unsecured” debt (credit cards and loans etc) into your mortgage, the answer is, sometimes

When you’re looking to buy a home, and you own a car, you ideally want to know the rules on parking in the area. Parking rules can be confusing, even for the most experienced of drivers! This is why we have written this blog to help you.

There are several potential sources you can consider when it comes to getting together a deposit to buy a property. Providing proof of the source of your deposit is a key requirement in the application process and will need to be given to both the lender and the solicitor.