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Older borrowers with interest-only loans using equity release to clear mortgage trebles

The number of borrowers using equity release as a means of paying off an interest-only mortgage has trebled.
Lenders have tightened up on their lending into retirement criteria over the past 2 years, possibly in prospect of the Mortgage Market Review launched last April.

It has been estimated by Age Partnership that the number of people to have used an equity release plan to pay off their interest only mortgage has risen by 193%. The study showed that 229 people used an equity release plan in April 2015 whereas only 78 people did in April 2014. It was also estimated by the retirement provider that over the past 12 months a total of 2246 older borrowers have used equity release to pay off an interest-only mortgage.
Age Partnership has stated that the average interest-only mortgage held was £61,856 in April 2015 but customers actually released an average of £73,980.

It has been estimated by the FCA that 260,000 of the 2.6 million outstanding interest-only mortgages do not have a repayment strategy in place to repay the capital at the end of the term.

The affordability criteria introduced by lenders as a consequence of the Mortgage Market Review has made the interest only time-bomb all the more devastating meaning that few older home owners have the opportunity to set up a new strategy to clear their debt. It is now harder for lots of home owners to clear their interest only debt whilst still remaining in their home. In the worst cases, retirees are being forced to sell their homes and move to a smaller property to pay down their debt. Understandably, this is a stressful outcome which often causes unnecessary upset later in life.

Borrowers with interest-only deals should not be forced to abandon their life-long homes.

Borrowers may have to wait weeks for branch adviser meetings

Borrowers could be forced to wait weeks for an appointment with lenders’ mortgage advisers after the Mortgage Market Review as firms race to get qualified staff in place.

Last week, a business development manager at one of the UK’s biggest lenders warned brokers at conference that customers could expect waiting times of up to a month to see a lender’s in-branch mortgage adviser.

The BDM also told brokers that lenders’ face-to-face meetings could take between three and three-and-a-half hours from 26 April, when the rules come into place. Read the rest of this entry

Nearly two-fifths of British house hunters fear mortgage rejection

Nearly two-fifths (38 per cent) of house hunters are concerned they will be rejected for a mortgage, according to new research by TSB. The survey of 2,014 people showed younger buyers – those under the age of 35 – are particularly concerned about obtaining a mortgage, with 66 per cent fearing rejection. On a geographical basis, Londoners are most worried about their mortgage applications with 54 per cent expressing fears, compared with 19 per cent in the North East – the lowest in the country. According to the results, the biggest perceived obstacle to consumers’ applications is their level of income, with 41 per cent of respondents citing this as Read the rest of this entry

Look beyond Help to Buy at all the options

The Help to Buy mortgage guarantee scheme is making the headlines at the moment given its earlier-than-expected launch at the Conservative Party conference. But it may not be suitable for everyone and there may be alternatives especially as many regional building societies already offer 95 per cent loan-to-value mortgages. Read the rest of this entry