Could equity release offer an interest-only mortgage repayment solution?
Equity release is being hailed as a potential solution to the much publicised interest-only mortgage ticking time bomb.
The FSA estimate that around 1.3 million home-owners on interest-only will not have the means to repay their mortgage in the next eight years.
However this news may not be all doom and gloom as many could have the means to pay off the capital owed through equity release.
The Nationwide House Price Index has shown that a property mortgaged 25 years ago will have increased in value by around 260%. This means that home-owners who resisted the temptation to consistently remortgage are now likely to have a high level of equity.
Despite some home-owners having a large amount of equity, it seems that the banks attitude towards lending into retirement means those interest-only home-owners who have no cash savings just equity, are likely to be forced to sell their home.
New interest only rules are dictating that lenders need to reduce their lending terms. Many are keen to reduce their interest only lending liabilities as now such deals are seen as a permanent debt. For some home-owners switching to a capital repayment mortgage is not an affordable option.
Equity levels for some are high and lifetime mortgage products or equity release could provide a solution for some to the interest-only mortgage problem.
Deal Direct can source the most competitive mortgage deals currently available in the UK so contact one of our highly skilled advisers today.
