What to do when your interest-only mortgage ends as 81,000 set to finish this year
The regulator has warned that a significant number of people with interest-only mortgages could lose their homes
HUNDREDS of thousands of interest-only mortgages are due to come to an end over the next two years, leaving people to pay off their loans in full.
The financial watchdog has warned that "significant numbers" of people could lose their homes as a result.
The Financial Conduct Authority (FCA), along with Experian, has calculated that approximately 81,400 of these deals will come to an end this year, with a further 82,100 ending in 2019.
The total value of the mortgages coming to an end in the next twelve months is £9.2billion, meaning homeowners owe over £113,000 each on average.
Anyone whose mortgage comes to an end will need to come up with the money or negotiate another deal with their provider - otherwise their home could be repossessed.
If your agreement is ending soon and you don't have the savings to pay it all off at once, you need to come up with a plan - fast.
4) Equity-release or retirement interest-only deals
One new option you could consider is a retirement interest-only deal.
Lenders offer these mortgages to help older homeowners trapped in interest-only deals.
The idea is that you pay interest on your house as long as you live there, but then have to repay the loan when you sell up, go into care or die.
The downside is that you won't be able to pass on property to your children as it will be used to pay off your debts.
Another option may be to use equity release to release some of the value of your home to pay off your debts.
With a lifetime mortgage, which is one of the most common forms of equity release, you can release up to 50 per cent of the value of your home.
There are different sorts available, including drawdown options, which release cash in chunks, and protected plans that guarantee some inheritance for your family.
Whether you will qualify depends on your loan-to-value (LTV) rate.
Check that your plan has a "no negative equity" policy to make sure you won't end up with debts larger than the value of your house.
Before considering equity release, it's important to meet with a financial adviser.
Be warned that you may substantially reduce the amount of money you can leave to your family.
A new Experian tool reveals whether you’ll get accepted for a mortgage and how much you can borrow.
Paying £25 extra a month will get you mortgage free a year earlier.
Why a mortgage with a lender you’ve never heard of could save you HUNDREDS of pounds.
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