If you have an interest only mortgage, you need to be aware that at the end of the mortgage term, you will still owe the capital balance (the balance you borrowed).
It is therefore essential to have a plan as to how you will repay these funds once the mortgage term has expired. Without this, you could find, like Mr and Mrs Fitzgerald, that the property has to be sold either voluntarily or through the Bank having to take action.
Interest only mortgages remain an attractive option for people, as the initial monthly repayments are much cheaper. However, there is a serious pitfall in that couples then need to come up with a way of paying off the capital at the end of the term.
In cases where parties are then divorcing, this can mean that the available equity to be shared is significantly reduced.
If you have an interest only mortgage, you should consider when the term expires and consider how you will repay the loan. If you are struggling, mortgage experts recommend being open with the lender and asking for help.
If you are worried about a separation and financial matters arising from any separation, please contact me for assistance.
t: 01722 446246
The Fitzgeralds are among the worst- hit victims of Britain’s interest-only mortgage crisis. About 1.67 million people have one of these deals, with tens of thousands due to mature in the next few years. Like other customers sold this type of home loan in the Nineties and 2000s, the Fitzgeralds haven’t had to repay a penny of the capital until now. Instead, they only paid the interest each month.