Typically stultifying, interest-only mortgages can put homeowners in the position of using their home’s equity to get out of debt, a solution used by almost a quarter of customers, per Responsible Life, an equity release advice company. Faced with dwindling fiscal options, equity release can be a home-saving salvo for owners. This remains particularly true as switching to a different type of loan is now hampered as once-in-vogue interest-only loans no longer meet new ‘affordability criteria. Between the rock of institutions, like Nationwide, who’ve removed interest-only options from their loan products, and the hard place of new regulatory criterion for capital repayment mortgages, equity release (which accepts customers sans the affordability scrutiny of standard mortgage lenders) might be perceived as the only cushion out there for interest-only mortgage-holders to land on.
Key Takeaways:
- The lifetime mortgage has proven to be a popular option for home owners. They can sign on to a mortgage that could change their lives.
- But some people are turning to equity release to pay off their interest. That is a smart financial option now available to thousands of people.
- Equity release needs to be negotiated with the mortgage holder. The bank may be willing to discuss various deals available to consumers.
“Equity release could provide a lifeline to some of the Financial Conduct Authority’s estimated 260,000 people with an interest-only mortgage and no repayment strategy.”