FCA Interest Only Mortgage Warning

FCA Interest Only Mortgage Warning.

The newly established financial services regulator, the Financial Conduct Authority (FCA) has issued a stark warning to people that have interest only mortgages.

They have warned people that they may be able to afford to repay the debt that will still be payable at the end of the mortgage term and suggest that the average shortfall is around £70,000.

Our view
This is not rocket science.  People take on interest only mortgages either because they cannot afford a repayment mortgage (which means they should not have been allowed a mortgage anyway) or the property is seen as an investment and the intention is to sell the property for profit at a later date.

What to do if you are worried?

Consider using rent a room relief – this is where you can rent a room in your home for up to £4,250pa tax free.  You can then use the excess to reduce the mortgage debt.

Consider downsizing.

Contact us about ways to tackleinterest only mortgages and release capital from other sources e.g.  pensions.