Number Of Interest Only Lenders Rise
According to Moneyfacts.co.uk, there has been an increase in the number of lenders offering interest only residential mortgages that are going to be repaid following the sale of the property. Apparently, there are now 33 such lenders.
Many years ago, there were an awful lot of lenders providing interest only mortgages but, following the economic crisis here in the UK, there was a tightening up of lending guidelines and such mortgages were frowned upon with capital and interest repayment mortgages really being the only option going forward.
Back in June 2013, the number of interest only lenders that were looking to the homeowner to sell their property to clear the mortgage stood at 12. By June 2016 this had gone up to 25. The following year, in June 2017, this stood at 29 and by June 2018 it had gone up once again to 33.
Apparently, there are an awful lot of people who are going to be faced with, potentially, having to sell their properties in which they live when they get older to clear the mortgage and this is giving cause for concern from a social point of view. Therefore, the rules have ben relaxed a little and there are some lenders who are introducing products that would enable someone to live in the property until the sole surviving partner has died at which point the lender would then have the property sold to clear the borrowing. Any remaining funds would then no doubt go to the estate, hopefully to be distributed in accordance with the wishes of the homeowner. The homeowner would, of course, have had to make sure that he or she has met the interest repayments on the borrowing on say a monthly basis during the lifetime of the mortgage.
There is no doubt an awful lot of competition within the mortgage marketplace with lenders looking to introduce new schemes to attract potential borrowers and retain existing mortgagees. So, it will be interesting if more lenders start to offer such mortgages.