HomeOwners Alliance logo

Sign up to our newsletter for the latest property news, tips & money saving offers

  • Moving home during coronavirus - Read latest advice

Interest-only mortgages tightened again as families face massive increase in repayments

Regulator to force banks to ensure their customers have a viable repayment plan

An FSA report to be published this week will tighten rules which force mortgage lenders to thoroughly check whether borrowers have a credible repayment plan. There are almost 10 million mortgages currently taken out in the UK, of which 42 per cent are interest-only. A huge proportion of borrowers with interest-only deals are not on course to complete their repayment plan in time for the expiry of their mortgage. Standard Life recently revealed that out of 106,000 mortgages which mature this year, a whopping 104,000 would fail to settle the home loan debt.

The FSA’s recommendations will force lenders to examine more closely their customers’ repayment plans to see if they are really viable. If not borrowers will be forced onto a capital repayment plan which could increase their monthly costs significantly. For example monthly interest-only repayments on a £200,000 4 percent deal would be £666, whereas a capital repayment deal would cost £1,055.


Leave a comment




* required

No Comments

No comments yet.

 
×

Sign up to our FREE fortnightly newsletter

For the latest news, advice and exclusive money saving offers.