At the height of the property bubble, interest-only mortgages seemed like a good idea for those who really wanted to get on the property ladder especially young people with little or no deposits and limited income.
They were also attractive to those building buy-to-let property portfolios who expected property values to keep on rising over the term of the loan.
But its quickly become apparent that these mortgages were too good to be true.
Government research shows that more than half of all interest only mortgages where approved without the lender asking for proof of income and outgoings.
These are so-called self-certified mortgages where the banks accepted the customers details of their personal income and expenditure. In many cases, the banks also sold mortgages without setting out a repayment plan with customers storing up trouble for the future.
“In life, we often experience unexpected financial setbacks and it can be a real struggle to find your feet again. Your mortgage may start to suffer and finding repayments is a real struggle. In the meantime you are accruing arrears and getting into more and more property debt. If you are worried about losing your home because of negative equity, don't ignore the problem, do something about it.”
“Is your property no longer suitable?
Nothing beats the feeling of buying your first home together. A place to start a family and look towards the future. However, as your family grows, you may find your home becomes too small and you need to move. Like many others, you could find that your house is now worth less than when you paid for it.”
“Interest Only and no way to repay?
Are you one of the 10,000's of homeowners in the UK who were sold an Interest Only mortgages without any real prospect of paying this off. Burying your head in the sand and waiting for interest rates to rise will not fix the problem.”
“Need to sell?
Finding yourself in a situation where you have to sell your home, due to marriage breakdown or a property that is no longer suitable can be really tough. The market can be turbulent and you may find that your home is worth considerably less than when you first bought it. If you want to sell in a hurry then you may have to sell at a loss.”