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Conveyancing Marketing Services

2.6 million interest only mortgages will be due for repayment within the next 30 years

Much has been said and done to help first time buyers onto the property ladder but older home owners who may face losing their life time home have been kicked into the long grass because of the stringent Mortgage Market Review (MMR) rules.

In a review published in May 2013 the Financial Conduct Authority (FCA) predicted that the future for older buyers on interest only mortgages would be difficult. The review highlighted that:

• 2.6 million interest only mortgages will be due for repayment within the next 30 years and while nine out of ten (90 per cent, 2.34 million people) have a strategy to repay their mortgage, 10 per cent of the total 2.6 million interest only mortgages - equivalent to 260,000 people do not have a strategy to repay their mortgage at the end of the term.
• Estimates produced for the FCA suggest that up 50% of interest only borrowers may not have sufficient money or an insurance or pension scheme to repay their mortgage at the end of the term.
• The FCA estimates that older borrowers are underestimating the potential shortfall on their mortgage with estimates produced showing that shortfalls could be up to 50% higher than borrowers predict.
• 21 % of borrowers intend to use savings to repay their mortgages while 19% will move to smaller homes and pay off their mortgage.
• 15% of borrowers plan to re-mortgage but may not be aware that this has become increasingly difficult since MMR.

Age Partnership has highlighted that following the Mortgage Market Review (MMR) many lenders have tightened up their criteria in relation to older borrowers due to concerns that they will be unable to afford mortgage payments into and beyond retirement. This has led to treble the number of older borrowers having to depend on more expensive equity release mortgages to pay off their interest only loans.
Some lenders still lend up to age 85 but the majority of lenders that used to lend in this age bracket have now capped the lending age at 70 or 75 and others have pulled out of the lending into retirement market altogether. The few lenders that continue to support older borrowers with mortgages up to the age of 85 are reported to be overwhelmed with new mortgage applications.
Borrowers approaching retirement and stuck with an interest only mortgage have few options and will need expert advice to avoid losing their family home. Sharon Buthlay, property lawyer and director of Conveyancing Marketing Services advises:-
• Address the problem now. Ask your lender for a redemption statement so that you know how much is still outstanding on your mortgage.
• Speak to your current lender about switching to a repayment mortgage or part repayment mortgage. If they wont’ help then
• Speak to an experienced mortgage advisor who will be able to shop around for Lenders that do still offer mortgages into retirement and beyond.
• If you are considering equity release to repay your mortgage speak to an experienced solicitor so that you understand what this means to you and your family.
• Consider whether you can release funds from investments or a pension to repay your loan
Conveyancing Marketing Services provides professional, friendly conveyancing services throughout England & Wales. Specialising in all types of property conveyancing including Equity Release they provide a fast, efficient service at a competitive price.

This press release was distributed by ResponseSource Press Release Wire on behalf of Conveyancing Marketing Services in the following categories: Personal Finance, Business & Finance, Construction & Property, for more information visit http://pressreleasewire.responsesource.com/about.