Interest only mortgage holders to review repayment vehicles.
Lenders are tightening their interest only mortgage lending criteria but deals still remain available.
With interest only mortgage deals accounting for around 43 per cent of all mortgages held in the UK, there are fears that many may not have an adequate repayment vehicle in place to pay the capital owed at the end of the term.
In December last year the FSA ruled that interest only mortgages should be judged as a repayment deal by lenders assessing applicants affordability.
This ruling prompted Santander to reduce its LTV from 75 to 50 percent and Lloyds brought in some restrictions on acceptable repayment vehicles.
Council of Mortgage Lenders figures show that in 2007 a third of all mortgage approvals were interest-only with around three quarters having no repayment vehicle in place.
The FSA claim that the lack of adequate repayment vehicles could lead many to experience problems as they reach the end of their mortgage term.
Interest only mortgage holders should review their repayment vehicle and if it looks likely to fall short of the capital required at the end of the term, switching to a repayment deal could be the best move.
Deal Direct are 'whole of market' brokers and as such are well placed to find you a competitive repayment mortgage. If you are looking to switch from your current interest only mortgage deal then contact us today and we will search the UK mortgage market on your behalf for the best rate on offer.
