Interest only mortgages – FCA warn borrowers of shortfalls
Written by Payplan Ryan on 2 May 2013
2 May 2013
Latest statistics out today show that around half of 2.6million homeowners who have an interest only mortgage, may not be able to pay the capital when the mortgage ends. 48% (some 1.2m customers) of them will be faced with a shortfall – the average in excess of £70,000.
The Financial Conduct Authority (formerly the FSA) have issued a warning that customers with interest only mortgages will need to have sufficient savings in place or are advised to switch mortgages before facing a significant shortfall.
The FCA has advised mortgage lenders to contact those who will be affected to discuss options and alternatives.
If you are affected by this news and are unsure of how to proceed with an interest only mortgage (IOM), here are a few things to consider:
- Assess your current position. Can you afford the capital repayment upon completion of the interest only mortgage? With an IOM you will need to pay the full amount you borrowed after paying the interest.
- Start saving. The quicker you start to build savings the more you will have at the end of your mortgage term.
- Can you re-mortgage? Shop around and make enquiries with your current provider.
Switching rates if you can afford it may be a prudent choice.
If you are struggling with debt then Payplan can help you to assess your financial situation and deal with any debt problems.
Filed under Industry News