Looking to Pay Off Your Interest-Only Mortgage?
Could equity release be the solution to paying off your interest-only mortgage?
The warnings have been brewing for several years, and we are quickly approaching the interest-only mortgage time-bomb detonation. With the FCA (Financial Conduct Authority) identifying 2017/18 as one of three key ‘peaks’ in which a large number of loans will mature, the issue is more pressing than ever.*
The concern is not simply that these mortgages are reaching maturity in large numbers, but that mortgage watchdogs have expressed the concern that many people “do not have an appropriate strategy” in place for repayment.
More than 100,000 of these mortgages are set to mature this year alone, and there are 1.5 million additional interest-only mortgages still active. This upcoming crisis was fuelled in the 1990s when endowment mortgages, linked to interest only, were at their most popular.
While downsizing is one option, many homeowners don’t want to leave the home that they love. For people in this situation, one alternative solution could be equity release. Indebted homeowners could clear their interest-only mortgage by releasing some of the equity tied up in their home.
Paying off your interest-only mortgage could be the start of a less anxious retirement. Depending on the value of your home, you could even raise extra funds for home improvements, holidays, or any other expenses to help you enjoy your retirement to its fullest. Why not use our free online calculator to compare the whole equity release market and find the best deal for you?
Before considering equity release, we recommend reading ‘is it right for you?‘ carefully. You should also understand that equity release will reduce the value of your estate, and may affect your entitlement to means tested benefits. The most popular form of equity release is a lifetime mortgage, which is a loan secured against your home.
*’Best way to pay off interest-only mortgage: follow these six solutions’ – The Telegraph, May 2017