Interest-only mortgage deals – should you stick or switch?

If you have a fixed rate interest-only mortgage, you could find yourself on a higher rate when your fixed term comes to an end.

For those sitting on an interest-only deal with no repayment plan in place, the advice is shop around and switch lenders to get a new more competitive deal.

There are cut rate mortgages on offer, but the mortgage boom seems to be offering little benefit to interest-only mortgage holders sitting on an unexploded time bomb.

Banks have been ordered by the Financial Conduct Authority to treat interest-only home-owners fairly, which includes not charging a higher rate than other customers when they come to the end of their fixed term.

Interest only customers with no means to repay their loan and little equity, may think it too much of a challenge to switch their mortgage to another lender. Many therefore end up sticking with their current lender at a higher rate, without finding out what their options really are. Some lenders are taking advantage of this situation and charging higher than average rates.

However with recent improvements in the mortgage market, interest-only mortgage holders may now have more options.

If you are an interest-only customer, you may well find that as mortgage rates have fallen to historic lows and property prices have increased, your position is now stronger.

If you have equity in your home you may find a switch to a cheap repayment mortgage an option now that mortgage availability has improved.

If you want to switch to a repayment mortgage you are recommended to call Deal Direct. We are both 'whole of market' and independent, and can search the market for an alternative deal for you to switch to.

If you want to remortgage from an interest-only mortgage speak to one of our advisers on 0800 048 5399. Let us help you switch to a better deal.

For advice on switching from an interest-only mortgage,

call 0800 048 8828 today.