25 years ago I was sat in my office selling endowment mortgages. Lots of them! Please don't hold it against me, at the time they were all the rage.
Both Interest rates and returns on investments were high and it made perfect sense for borrowers to pay just the interest on their mortgages and save in an endowment policy to repay the mortgage in 25 years’ time. But then interest rates got higher, things got tighter, interest rates went higher still, things got even tighter.
Fast forward to today and it is estimated that over ½ million interest only mortgage holders have absolutely no plan in place whatsoever to repay their mortgages when they are called in for repayment over the next few years.
At the beginning of last year the Mortgage Required phone started to ring with a trickle of slightly panicked individuals wanting advice on what to do about the £50,000/ £ 150,000 / £250,000 the Halifax / Cheltenham & Gloucester/ Bank of whoever needed back in 6/3/1 months’ time! Now we are getting a steady flow of such calls. The bad news is, the lenders do want their money back, and the great news is that there are now plenty of options:
If you are still working, there are plenty of lenders happy to extend terms on a normal affordability based mortgage. At the other end of the scale, there are plenty of lenders offering “Later Life” Lending (the cleaned up version of Equity Release) where they will simply give you the money and you pay nothing at all and the interest simply accumulates. These schemes allow you to stay in your home until you die and come with no negative equity guarantees.
But there is an ocean of borrowers who sit in the middle. Those who have decent pensions or reasonable incomes who can still afford to pay their mortgages each month, but simply don't have the capital to repay the loan. Lenders such as Santander and Hodge Life have come up with some hybrid products to suit all needs and pockets.
So, if you have a mortgage which is due for repayment any time soon (and by that I mean in the next 5 years!!!) and you haven't yet got a plan for repayment, contact an independent mortgage adviser who deals with later life lending. The sooner you make the call, the chances are the more options that will be open to you. Oh, and by the way, don't panic!
For more information about later life lending contact us on 01628 507477.
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