A recent study by the Financial Conduct Authority (FCA) confirmed there are 1.67 million interest only mortgages in the UK \u2013 with home owners relying on continued house-priced rises to repay the loan in the future. However, this would necessitate selling the property if a switch to a repayment mortgage isn\u2019t considered in good time.<\/p>\n
One of the FCA report\u2019s more troubling findings was that such borrowers are reluctant to contact their lenders and speaking to them about setting up repayments for a variety of reasons, which is a real concern in the medium to long term.<\/p>\n
With interest rates at a record low, and mortgage deals remaining cheaper than they have ever been, now is the time to \u201cmake hay while the sun shines\u201d and to start chipping away at the debt \u2013 especially before threatened interest rate rises are implemented in the coming months.<\/p>\n
As an example, if you have an interest only mortgage with Santander for \u00a3200,000, taken out over twenty years on their standard variable rate, the monthly payment would be \u00a3790. If you were to convert this to repayment, over the same term, and we renegotiate the rate to 1.59%, the monthly payment would be \u00a31131 \u2013 a monthly increase of \u00a3341, but a far better long-term solution. It should be noted there would be no need to go through an underwriting process or survey.<\/p>\n
Here at The Financial Planning Group, we pride ourselves on being to offer our clients mortgage products from the whole market, which opens up so many more options and offers \u2013 we have 25 years experience in helping families find the perfect low-rate deals and ensuring that the financial side of moving home is as stress free as possible.<\/p>\n