8 SIMPLYBIZ MORTGAGES
Plugging the interest only gap
The number of new interest-only mortgages sold has fallen steadily in recent years following a change in lenders ’ criteria . However , there ’ s a still a high proportion of these mortgages due to mature every year until 2032 . And , approximately 40,000 mortgages due to mature each year are held by borrowers who will be over 65 at the end of the term .
Many of these borrowers are expected to be financially vulnerable . For various reasons , including endowment shortfalls , it ’ s expected the majority will not have enough capital to repay their debt , leaving them at risk of losing the home they love .
Lenders may agree to extend the existing term of the mortgage , although an extension may only be granted for a relatively short period . This has the impact of delaying the inevitable as the capital balance remains outstanding and would still be due to be repaid in full at a later date .
Some lenders are happy to explore the option of converting the debt to a Capital and Interest repayment mortgage . While this may seem like the simplest solution , it ’ s likely to be deemed unsuitable for a large number of borrowers . This is particularly the case for those who rely solely on their state pension for income and are assessed by the lender as unable to afford the higher monthly repayments .