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Ticking timebomb that you need to defuse now; The big issue.

INTEREST-ONLY mortgages are back in the news, with thousands of homeowners coming to the end of their standard mortgage terms over the next year or two.

Many of these borrowers have no means of repaying their loans when their mortgage term ends and are potentially in for a nasty shock if their lender tells them they want paid.

Many borrowers in this situation are assuming that their lender will be flexible and allow them to roll their mortgage over to a new loan, perhaps even sticking with an interest-only mortgage again.

Some lenders could force a sale if their borrowers don't have the cash to pay them. Let's hope that this doesn't happen and that lenders take a sensible view when faced with borrowers who can't pay by asking borrowers to extend the term of their loan and to do so with a repayment loan instead of an interestonly loan. A switch from interest only to repayment is likely to lead to a huge increase in monthly payments for borrowers, especially for older borrowers who may have to make repayments over a shorter period of time interest-only soon, now.

how long if you to cope with lenders' maximum age requirements.

Remember that if you borrow PS50,000 with an interest-only loan over 25 years, you will never repay any capital during the term of the loan so at the end of 25 years you will still owe PS50,000.

In the early days of interestonly loans, borrowers would take out an endowment policy that would pay off the loan at the end of the term. Many people still have these policies but a lot won't pay enough to repay the whole loan.

If you have one of these loans, you need to speak to your lender as soon a possible to discuss options. It may be that some sort of lifetime loan where the loan is repaid from the sale of your house after you die is appropriate but you need to sit down and talk to someone as soon as you can to go through all of your options.

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DANGER Interest-only mortgages

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Title Annotation:Features
Publication:Daily Record (Glasgow, Scotland)
Date:Feb 2, 2018
Words:355
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