What can you do if you can’t pay off your interest-only mortgage?
Around half of all interest only mortgages could have a shortfall. What should you do if you’re one of them?
It’s reckoned that over two and a half million borrowers currently have interest only mortgages and many may not be able to pay them off in full. These mortgages were aggressively sold in the 1980s and 1990s, often alongside endowments (investment plans with built-in life insurance). But some people never took out an investment plan to pay off their interest-only mortgage and many endowments won’t make anything like the amount that was promised.
What are the most competitive mortgage deals on offer at the moment?
The mortgage market is offering some good deals, but you have to look beyond the headline rate.
Mortgage rates have been falling for the last few months, ever since the Bank of England set up its ‘Funding for Lending’ scheme. This allows banks to borrow money cheaply, as long as they lend it out for mortgages and small businesses. You may be able to a two year fixed rate mortgage at around 2%. But – as ever – it’s not only the headline rate you should look at.
5 things to look for if you’re thinking of taking out an equity release mortgage
Equity release is aimed at older people who want to take money out of their home's value. What are the catches?
Today a parliamentary committee published a report saying that the UK was badly prepared to deal with an ageing population. It said that older people will have to boost their pensions or pay for care with equity release products (where you take out a loan but don’t make payments or you sell part of your house to an insurer, in exchange for a lump sum). It wants the government and financial services companies to come up with more innovative products. But what should you look for if you’re thinking of taking out an equity release product today?