Hundreds of thousands of homeowners could be at risk of losing their homes by ignoring how they are going to pay your mortgage, a regulator has warned.
Almost one of every five mortgage holders has a interest only home loan, which means you would have savings or other funds to pay a final lump sum.
The Financial Conduct Authority (FCA), said at the end of these terms of the mortgage would peak in the next 10 to 14 years.
Many borrowers were ignoring letters from lenders, which they found.
Interest-only deals allow the borrowers to repay the borrowed amount only when the mortgage term ends, generally, after the age of 25, but there is concern that a multitude of homeowners do not have plans to pay the final bill.
The FCA said that 1.67 million full interest-only and capital repayment of the mortgages were still outstanding, which represents 17.6% of all mortgages in the united kingdom.
A peak of these accounts the end has come in the last year or so, for those that took out endowment policies in the years 1990 and 2000.
The less well-off, middle-aged homeowners who often converted to interest-only deals in 2003-09 – that are concentrated in the South, the West, the East and the north west of England as well as London and the West Midlands – will see their final payment of the demand come in 2027-28.
The regulator said that lenders had improved their communications with clients at risk, as your initial report on the matter of five years.
However, there are still concerns that some customers may have been incorrectly reassured about their plans for non-specialist staff. Action required
The FCA had more concerns with regard to the reaction of borrowers who, for a variety of reasons, were ignoring letters from your lender.
Some believed that they had a suitable payment plan in place, while others were simply burying your head in the sand. Some had little confidence in their lender, so they suspected the letters.
The FCA urged to these borrowers to talk to their lender as soon as possible, otherwise, it might limit your options throughout the time of paying your mortgage.
“We are very concerned that a significant number of interest-only customers may not be able to pay off the capital at the end of the mortgage and be at risk of losing their homes,” said Jonathan Davidson, executive director of the supervision of the FCA.
Hannah Maundrell, from the service of comparison of Money.co.uk, said: “You may be able to remortgage your property, extend your mortgage to give you time to raise the money to pay the debt or look for another mortgage from a different lender.
“If you are at risk of losing your home, there are government plans that could help. The key is to pick up the phone and talk with your lender.”