Interest-only

Interest only always has a place when done correctly. Nobody should take interest only solely to keep the costs down and this is where advice should be sought to ensure the mortgage can and will be paid at the end of its term. Most people have also been scared of interest only due to the previous negative publicity when, for some, it would have its benefits. Interest Only ultimately always depends on the individual carrying out their intended actions to repay the debt.

The results are surprising as we havent seen any real increase in take up of interest only mortgages. We have seen more borrowers asking about the availability of such options but when fully researched and explained it has rarely been the recommended solution to best meet their needs.

It is no surprise that Interest Only mortgages are on the rise. As people come to the end of their fixed rates the sudden increase in mortgage payments has forced borrowers to consider interest only just to get by monthly.
Household budgets have been stretched significantly and people are doing all they can to illeviate the pressure.
As rates improve, we should see the uptake in Interest Only subside. Hopefully borrowers will then return to Repayment mortgages where possible.
Interest Only can be an effective short term solution to help keep the roof over your head and the payments manageable. But failure to review it and ensure an effective repayment strategy is in place can cause havoc in later years when the mortgage term ends.

We've not seen a marked increase in interest-only mortgages. The same types of client and scenario tend to be where we arrange most interest-only mortgages which are large borrowing amounts, at a fairly low loan-to-value for high earners who are looking to manage their cashflow. They tend to get healthy bonuses and have other investments which will be used to clear chunks of capital in the future, and the lower monthly payments today give them more flexibility to put their money to work elsewhere.

A recent case we worked on was for a client who has significant monthly outgoings on private school fees. This won't be forever, so having lower monthly payments now, means they can live in the house they want, whilst still putting their kids through private education. Once the kids are older, they'll be in a position to allocate more each month towards clearing the capital on the mortgage. It's all about what's important to people and how it fits in with their lifestyle.

Yes I have seen an upturn in enquiries looking for interest only, however not from clients wishing to change from a repayment mortgage but from clients who are already on interest only and are having to repay the existing lender. I think some of the increase I am seeing is perhaps the usual tyre kicker enquiries we see after the Christmas and New Year period, however, I think over the coming couple of years we will see a definite upturn in those requiring this method due to the number of existing interest only loans coming to an end and requiring repayment.

So with the results of the poll, 46.3%, reckon there's an uptake in the interest-only road. ? People are feeling the financial squeeze tighter than a snail in a lemon squeezer. Interest-only promises lower monthly payments. Who wouldnt be tempted in a cost of living crisis. The other half, 35.7%, say no, and haven't seen a big change. And 18%, see it as a right royal knees-up of an increase. So, what's the truth? It depends where you look. Some lenders might be pushing these things harder than a politician on the election trail, while others are steering clear like a Bugatti from a pothole. You're not actually paying off the loan, just the interest. The big lump sum at the end is still looming, like a bailiff with a clipboard and a mean glint in his eye. Personally we have yet to see any increase in Interest Only applications or enquiries, and i expect this trend to continue.