Homeowners are encouraged to seek out remortgage advice before they actually need it.  No matter where a homeowner is in their current deal they should be looking into the future and figuring out what will be their next move.  By doing so many will be prepared to face what is ahead and for some it will give them adequate time to make adjustments to escape hardship.

One such group especially pushed to seek out advice are those with interest only mortgages.  Interest only deals are being phased out by many lenders and some are completely abandoning such deals.  Those in a current interest only mortgage could immerge at the end of their current mortgage term to find they have little to no options available to them in terms of a remortgage.

The Financial Services Authority estimates that there are 1.5 outstanding interest only mortgage holders.  Of that number it is expected that 80% will find as their deals end over the next 10 years that they are stuck without any means to get a remortgage.  They will be unable to sell, unable to remortgage, and unable to pay off their debt in levels to help them escape the situation.

Data from unbiased.co.uk reveals that of the 11.2 million households in the UK with mortgages, there are 1.6 million that have interest only mortgage deals. 

Karen Barrett, chief executive with unbiased.co.uk remarked, “With incomes squeezed, it’s not surprising that many people are trying to save money by sticking to interest-only mortgages, but this could become a serious problem.

“What is really worrying is that almost a third of this group (32%) are either in, or coming up to, retirement age, while more than half are in the 35 to 55 age bracket.

“Many could be forced to downsize or continue to pay large mortgages well into retirement, when income may be tighter than ever.

“Becoming ’mortgage free’ looks increasingly elusive for many people.

“In addition, with lenders clamping down on interest-only mortgages, and slashing LTV limits to 50% to 60%, many people currently on interest-only deals could find that no similar options are available when they try to remortgage.”