You are here: Home - News -

Combination mortgages are set to grow in current economic climate

by:
  • 01/07/2002
  • 0
Splitting endowment mortgages into different packages calls for good advice

Hybrid mortgages combining capital and interest-only repayments are set to grow in popularity. According to lenders, more borrowers are using them as a means of addressing endowment shortfalls.

By combining both capital and interest repayments under one umbrella, consumers do not have to surrender their endowment policy.

Allen Bruce, marketing manager of UCB, said: ‘These mortgages are becoming more popular. Last month, there were almost six million underperforming endowments. Borrowers need to look at their mortgage situation and decide whether to invest more in their endowment policy or look at the alternatives. If you switch to a standard mortgage, your endowment would be redundant where as with part and part mortgages, you can continue to use the endowment.’

Alan Long, head of marketing at Britannia, agreed: ‘Lenders are becoming more inventive, splitting their mortgages into different packages. In view of endowments, it is a good idea in the current economic climate.’

Bristol & West (B&W) offers these hybrid mortgages and has seen an influx in demand for this type of product.

Debbie Staveley, spokesperson for B&W, said: ‘Business on part and part mortgages has increased due to endowment shortfalls.’

However, hybrid mortgage products could provide problems for advisers, as more complex advice is needed.

Rob Clifford, managing director of Mortgageforce, said: ‘It is more difficult to advise on hybrid products. According to the Mortgage Code Compliance Board, 40% of registered advisers are not regulated by the Financial Services Authority so they are not qualified to recommend whether a client keeps an endowment policy or cashes it in. It is difficult for advisers to advise in a biased way and part and part mortgages make the advisory landscape more complicated.’

Advisers need to highlight the payment credentials to consumers wishing to take out a hybrid mortgage, according to Long: ‘More advice is needed as hybrid products are more complex. Borrowers need to be more aware it is not just one payment going out.


Tags

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
  • RT @ashridgepf: Well what a surprise! We love our clients and they obviously are quite fond of us. Mortgage applicants find humans more r…
  • RT @DanielleDennis9: Always love reading through the tweets of the year every December! Have a look through to recap on a great year https:…
  • RT @mortgagestall: Great to see the hard work brokers put in is getting ever-more recognised https://t.co/cg4ZaJzZJZ
Read previous post:
LENDER VIEW

The Intermediary Mortgage Lenders Association (IMLA) represents the views of some 25 UK lenders invo...

Close