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Majority of interest-only borrowers see downsizing as repayment plan

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  • 14/08/2013
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Majority of interest-only borrowers see downsizing as repayment plan
Four-fifths of interest-only borrowers are relying on selling their house to pay off the capital, according to a more 2 life survey of mortgage advisers.

More than a third of advisers said their clients were planning to downsize or sell their home to pay off their loan, while 43% said downsizing was part of a wider repayment plan.

A fifth reported their clients were relying on investments, 17% said they planned to use endowments and 11% savings.

More 2 life managing director Jon King said: “We found it quite shocking how many people were relying on downsizing as part of their strategy.

“Moving house is an easy thing to say but it not an easy thing to do. Very often these people have lived in this house for years and the repayment of the mortgage does not always coincide with the time you want to downsize. It is about the emotional issues as much as the financial.”

Mortgage advisers were often the first port of call for borrowers looking for advice on their interest-only loans, he added.

Just under half of advisers felt lenders and regulators were not doing enough to address the looming interest-only crisis, the survey found.

The number of people planning to sell their property to fund their retirement has risen by 4% to reach its highest since 2009, according to separate research by Baring Asset Management published this week. 

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