For those homeowners that were considering an interest only remortgage or those hoping to buy a property with an interest only mortgage, such an opportunity is closing.  It was expected that many lenders would be dropping the loan to value levels on their interest only loans and some have already done so, but recently a major lender, Nationwide, announced they would end interest only loans and this will likely be the beginning of many others doing the same.  Interest only mortgage holders should pay attention to what is occurring and be prepared to get a remortgage that will be the best for their financial situation.

An interest only mortgage requires that the homeowner pay only interest that is due on the loan.  The main principal amount does not reduce leaving the homeowners with the same level of debt as they had in the beginning while only keeping up with the interest due on the loan.  When property values are increasing it can be a good type of loan to get since the homeowner will most likely owe less than the property is worth.  However, with property values declining for years in areas outside of London the homeowners with interest only loans are likely to find their mortgage debt is much more than the actual current value of their property making it difficult to get approval for a remortgage.

By being prepared to face the possibility that when an interest only mortgage term ends that an interest only remortgage may not be available, a homeowner will have time on their side to make adjustments.  Getting advice now could go a long way to making remortgage plans in the future much more successful.