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.
Yesterday
Skipton Building Society launches ‘Delayed Start’ mortgage meaning first time buyers won’t be required to make repayments for the first three months.
According to a survey by Skipton, first time buyers who bought their home in the last five years found that in the first three months of living there, they were spending upwards of £30,000.
6 days ago
If you have recently moved into a property with a garden that requires a little TLC, or you’d like to get on top of your current green space, check out our tips.
9 days ago
High street lender, NatWest, have launched a new product to help first-time buyers purchase a property with assistance from a family member or friend to get them on the property ladder sooner.
10 days ago
‘Buy Now, Pay Later’ (BNPL) schemes, such as ‘Klarna’ are short-term loans that allow shoppers to make a purchase, but delay paying for it for an agreed amount of time.
Klarna is one of the most popular BNPL services with 18 million customers in the UK alone, and offers interest-free payment options which is appealing to shoppers. However, does it affect a mortgage application?
15 days ago
We look at how to get the best Buy to Let mortgage rate, what's in store going forward, and options as a landlord with increasing costs.
24 days ago
Throughout this past week, lenders have continued to reduce their mortgage rates giving borrowers in the UK some welcome news following the change in global tariffs under US President, Donald Trump.
24 days ago
Did you know that buying a house, or relocating is in the top 10 most stressful life events?
Stress of course is an unavoidable part of life and there are many reasons why people experience stress, not just buying a house!
There are lots of effective ways to manage and reduce stress, check out our tips to help you.
With the stamp duty relief ending in England and Northern Ireland, we have listed the top 10 cheapest areas for first-time buyers as published by Rightmove.