Last Updated: 12/10/2016
Tags: Shortfalls In Interest Only Mortgages
Homeowners who took out interest only mortgages between the 80’s and early noughties could find that they can’t pay back their mortgage over the next decade. According to the Cebr, Centre for Economic and Business Research the average shortfall will be around £21,000 per household, with a gross figure across the UK standing at £6.1 million, with 27% of those people not being able to pay back the shortfall.1
Lack of clarity when these homeowners took out their mortgages seems to have been one of the main issues, the study showed that 18% of mortgage holders said that they didn’t understand their loan, 23% of people surveyed did not know the rate of interest they are paying, with one in 10 saying that they have no plan to pay off the remaining debt and have no idea when the payment will be due. Some homeowners have planned to pay off these mortgages by using their endowment policies taken out at the same time but unfortunately, especially with the recent economic changes they have found that there still isn’t enough money left in the pot to pay back their loans.
Simon Markey Chief Executive officer for OneFamily stated: ‘Our research adds to a disturbing picture facing thousands of home owners who do not yet know how they are going to meet their mortgage obligations,’
‘With many just not sure what to do, it’s vital they seek advice on all the options including new lifetime mortgages which can help them pay off their interest only mortgage, release capital for other adventures, and stay in the home they love,’ he added.1
If you mortgage is coming to and end or you would like some help understanding your current policy why not pop into your local branch of Hawes and Co for a chat or call our team on 0208 946100.
Your home could be at risk if you do not keep up the repayments on your mortgage.
Source: 1. http://www.propertywire.com/news/europe/interest-mortgage-loans-uk-facing-multi-billion-pound-shortfall/