Resolution Service Offers Interest-Only Mortgage Prisoners Options
Currently, there are around 1.7 million interest-only mortgages outstanding in the UK. When 200,000 of these mortgages are due to mature by 2020, it is understandable that a huge number of borrowers and lenders are concerned about what will happen once the loan agreement deadline has passed.
In the time before the financial crisis in 2008, interest-only mortgage finance soared with many customers, on a tight budget, lured in by the prospect of low monthly repayments over a long-period of time.
Unfortunately, the vast majority of these customers have failed to plan for life outside the loan agreement. As the loan matures, many are faced with selling their home to repay the outstanding value of the original loan.
Unable to afford the increased monthly costs incurred with switching to a repayment mortgage and having failed to pay into an investment plan or make lump sum overpayments to their existing mortgage loan, thousands are forced into selling their home to pay off the loan or face breaching the terms of their loan, risking legal consequences.
When so many precious memories can be tied into a family home, improving the options for those trapped in the proverbial rock and hard-place should be a priority in the housing market that nonchalantly offered these mortgage options to people without asking for appropriate evidence or plans with how the value of the loan will be repaid to the lender.
Three leading organisations in their respective fields have collaborated to create a unique interest-only resolution that promises a clear strategy for the lender within 90 days of using the service; whether that be the customer re-mortgaging the property, converting to a repayment mortgage option, selling the property or through litigation.
Asset management specialists, Spicerhaart Corporation, fact finding experts, Excel, and UK law firm, TLT, are offering the service to lenders and interest-only customers whose loan is coming to maturity or newly expired.
The resolution group claim that the combination of expertise means that the service will offer face to face council to assess the customers circumstances and best advise on next steps.
The group aim to assist borrowers that remain reluctant to engage with lenders in the hope of finding a mutually beneficial resolution for both borrower and lender.
Dave Miller, client account manager at Spicerhaart Corporate Sales said:
“Over the past few years lenders have successfully implemented a wide range of strategies to contact their interest only customers. However, a proportion of those who are often the most vulnerable of customers, are still failing to engage, while many others are now past their term expiry date with no formal agreement in place for resolution.
“With arrears and repossessions at a historic low, it is evident that lenders are seeing greater success now than ever before in terms of engaging interest-only customers. But there are still many customers either unable or unwilling to engage which presents a real challenge for lenders.
“That is why we have created this proposition; we are able to combine all the expertise needed to be able to find the best solution for both lenders and their customers.”
Laurence Venn, CEO at excel, said:
“Our new proposition addresses the difficulty lenders face in resolving every case and is aimed at avoiding drift, which so often can occur in these difficult situations.”
Graham Walters, partner at TLT, commented:
“We aim to provide absolute resolution both for the customer and the lender based on the customer’s individual circumstances. This is an issue that needs to be dealt with and we believe that our approach can assist to achieve this.”
Are services like this important to interest-only mortgage users that have been using this type of mortgage product for the full term of their loan? Will this provide a section of home-owners, trapped in this mortgage product, with further options?