Interest Only Mortgages
There has been a lot of press recently surrounding the availability of an Interest only mortgages. The FSA had this down as the next big misselling scandal and had a vision that 1000’s of homeowners would be left high and dry when it came to the end of their mortgage term without a means of repaying the loan other than to sell their main residence.
We don’t agree with the FSA view. And more recently the newly formed FCA have also played down these fears and at the start of this month published their findings into interest only.
The FCA believes that with careful planning, consideration and engagement with their lender, many interest only borrowers – even those with loans maturing by 2020 – should be able to find a viable way to pay off their mortgage if they take control now.
For those set to repay their interest only mortgages before 2020, the key findings show that:
- Around 600,000 borrowers will see their mortgage mature in this period;
- About 90 per cent of all interest only borrowers have a repayment strategy (many of these borrowers will have had a mortgage linked endowment policy);
- Just under half of all interest only borrowers are modelled as likely to have a shortfall;
- A third of the 2020 shortfalls are expected to be over £50,000; and
- Typically these are individuals with relatively high incomes, high assets and high levels of forecast equity in the property at the end of the term, so many will have backup options even where their intended repayment strategy does not work out as they had hoped.
For the full report please visit http://www.fca.org.uk/news/interest-only-mortgages
Fox Davidson continue to be able to offer interest only loans, the criteria has just tightened. To discuss your interest only requirement in more details please do call or email us to see how we can help.