1.6 million face interest-only nightmare
Friday 30th March 2012
Of the 11.2million households in the UK with a mortgage, an astonishing 1 in 7, (1.6 million) are simply paying off the interest each month and not repaying capital or saving anything towards paying off their mortgage debt in the future.
That is the finding of research from professional advice website unbiased.co.uk.
"With incomes squeezed, it's not surprising that many people are trying to save money by sticking to interest-only mortgages, but this is a potential ticking time bomb," said chief executive Karen Barrett.
"What is really worrying is that almost a third of this group (32%) are either in or coming up to retirement age (55+) while more than half are between the ages of 35 and 55 (53%).
"Many will be forced to downsize or continue to pay large mortgages well into retirement, when income is tighter than ever.
The goal of becoming 'mortgage free' is becoming ever more elusive for some."
In addition, with lenders now clamping down on interest only mortgages, and slashing Loan-to-Value requirements to around 50-60%, many people currently on interest only deals could easily find that no similar options will be available to them when they come to remortgage in the future.
"To avoid any kind of payment shock when you remortgage and to ensure you have paid a considerable chunk of your mortgage off before you retire, it is vital to see a whole of market mortgage adviser.
"They will be able to help you get the best mortgage deal possible which matches what you can afford or talk you through the options for a repayment plan ensuring that you are fully prepared financially for your future."
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Editorial Contact Details - Conor Shilling