Nearly one million people face mortgage difficulties


Citizens Advice have announced that almost one million homeowners are unable to pay off their mortgages, because they chose interest-only loans.
The Financial Conduct Authority (FCA) did not expect this figure to be so high in previous estimates, and Citizens Advice said there are 934,000 homeowners who have no plan in place on paying back the money they owe at the end of the mortgage term. More than 432,000 people have not even thought about the problem, according to Citizens Advice.
For some, they are being warned time is running out to organise their finances, and failing to do so could result in people needing to sell their homes or having their property repossessed, unless they are able to acquire other funds.
Interest-only mortgages are where only the interest on the loan is demanded during the time period of the loan. However, at the end of the time-period, borrowers are required to repay the entire amount they have borrowed. This can therefore mean people are faced with needing to pay a huge sum, such as £200,000, and even with good prior planning this can be a daunting prospect.
They were sold to millions of buyers before the rules were tightened three years, with many seeing it as an opportunity to buy their dream home as they did not need to pay back a percentage of the amount borrowed every month.
“We expect firms dealing with interest-only borrowers to discuss repayment strategies and propose solutions where there are no plans in place,” said an FCA spokesperson. “While we have seen many firms progress with this, borrowers must also engage with their lenders now to resolve it, we will also continue to monitor lenders as part of our normal supervisory work.”

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