Could your interest only mortgage 'time bomb' be defused by equity release?

According to the Financial Conduct Authority, there are 2.6 million interest only mortgage holders due to repay their loan within the next 30 years.

According to FCA figures, 10% have no repayment plan at all and 50% could face a serious mortgage shortfall when it is time to repay.

Some interest only mortgage holders will consider equity release when their mortgage finishes.

However there are issues with equity release such as rates are often too high, and LTVs are often not high enough to cover the capital shortfall. In addition when opting for equity release home-owners find they are unable to leave much of an inheritance for their family.

So with equity release unlikely to answer all borrowers interest only mortgage issues what are the options?

Martin Wheatley who is the the FCA's chief executive is advising interest only mortgage holders to act now.

Borrowers are being warned not to bury their head as the problem will not go away by doing nothing.

Since mortgage rates have fallen and lending criteria has been relaxed at higher LTVs there are now more remortgaging options available.

Any interest only mortgage holder concerned they will be unable to repay their loan, should consider switching to a repayment mortgage. Rates are currently set at historic lows and while repayments may increase, you know your home will be paid for in full.

Failure to act could mean hardship in the future if you are left short of cash after you have sold your home to repay your mortgage. Some may even be forced into rental accommodation if there is not enough left over to purchase a new home.

If you have an interest only deal you should take advice now to see what your repayment remortgaging options are.

Deal Direct can help you switch to a new option, so while rates remain low contact an adviser and let us help you defuse that ticking 'time bomb'.

We can help you to ensure your mortgage is repaid in full at the end of your mortgage term.

Call today for advice and a quote call 0800 048 8828.