Interest only mortgages, is remortgaging the solution?

If you have an interest only mortgage maybe now is the time to remortgage. Talk to Deal Direct and we can help you find the very best remortgage deals in the UK.  With rates as low as they are now then there may never be a better time to consider a remortgage to get away from the prospect of a maturing mortgage which does not pay in full for your property.

The Financial Services Authority warns that the estimated £120 billion interest only mortgage loans due for repayment over the next 10 years, could present a "significant challenge" for lenders and consumers. The interest only mortgage product was popular in the last property boom as lenders became less strict about the repayment strategies accepted.

The risk of an increasing number of interest only mortgage loans reaching maturity without adequate repayment strategies, is likely to pose a significant challenge for both consumers and lenders over the coming years.

 The Council of Mortgage Lenders (CML) is working with its members to identify appropriate ways of assisting those interest only borrowers who do not have the means to repay the capital by the end of the term. The CML added: "In doing this it seeks to ensure that those borrowers who actually experience a capital repayment shortfall are treated fairly, with repossession remaining the last resort."

The FSA wants interest only mortgage loans to be considered as a "niche" part of the market but has said that it has no plans to restrict their use. Under its proposals, the FSA said lenders will be able to continue to offer the product as long as borrowers have a credible repayment plan. This does not include relying on higher house prices or an expected inheritance. Lenders should carry out a review at least once during the mortgage term to check that the consumer's repayment strategy is still in place.