Homeowners with interest-only mortgages who could face a shortfall in their repayment plans should take action or contact their lender as soon as possible to discuss their options.
The city regulator the Financial Conduct Authority (FCA) is urging anyone who hasn’t already spoken to their lender to do so sooner rather than later, to reduce the risk of them losing their homes if they’re unable to pay back what they owe.
Nearly one in five mortgage customers in the UK, equivalent to 1.67m people, have an interest-only mortgage, whereby they only repay the interest they owe on the capital sum borrowed each month. The capital is only paid back at the end of the mortgage term, so customers must ensure they have sufficient savings in place to cover this.
Many people with interest-only mortgages are less affluent homeowners who converted from repayment to interest-only mortgages several years ago.
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