The Council of Mortgage Lenders are concerned following a recent report from the Financial Services Authority, which revealed that there is a considerable number of people with interest only mortgages, who are looking to retire, but have not got any ideas or plans on how to continue to meet the repayments.
In the report the Financial Services Authority has estimated that 20 per cent of over 55’s have no repayment plans in place and this is also an area for concern, as the debt may never be repaid.
Our view
The plus side of the report found that the general understanding of interest only packages was high and the understanding of the risks involved was good. This means that interest only options can be good, if you have a repayment plan that will work. Overall though, we suggest people should not use interest only mortgages or seek in depth advice before deciding to do so.