According to research by equity release referral service Key Partnerships, 43% of estate agents have reported an increase over the past two years in the number of customers forced to sell to pay off interest only mortgages.
Interest-only mortgages were popular before the crash in 2007 because the monthly payments were much smaller than traditional repayment mortgages. These repayments only cover the interest on the debt, not the principal loan amount, which still needs to be paid back at the end of the end of the mortgage term.
According to the Key Partnerships survey, while demand is increasing for solutions to interest only repayment problems, only half of estate agents believe they have enough information about these plans.
Will Hale, director at Key Partnerships, said: “Selling up to pay off an interest-only mortgage can make financial sense, but it is worrying if older homeowners are being forced to sell and are not aware of all their options.”
While being forced to sell a property to pay off an interest-only mortgage could be a problem for many homeowners, for others it may not even cover the capital on the mortgage.
If a property has fallen into negative equity, meaning the value of the house is less than the outstanding balance on the mortgage, selling the home will still leave you stuck with the remainder of the mortgage, potentially tens of thousands of pounds in debt, and without their house.
| How we can help
There are a few resolutions for interest-only mortgage schemes. Our expert advisers will create a bespoke solution that will be best suited for your current financial circumstances.
| Term Extension
We have successfully negotiated term extensions for homeowners where the original mortgage term has expired or is expiring.
| Sale and Settlement
We successfully negotiate 100’s of cases every year where our clients’ property is sold, and an affordable debt settlement is agreed.
If you have an interest-only mortgage on a property in negative equity, contact our expert team for a consultation and find out how we can help you.