Homeowners allowed to go ‘interest-only’ without a repayment strategy

Homeowners allowed to go ‘interest-only’ without a repayment strategy

15:34 PM, 8th December 2022, About 2 months ago 4

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Homeowners struggling to pay their mortgage bills will be able to switch to interest-only deals without a formal repayment plan under new plans to help borrowers through the cost of living crisis.

The planned FCA guidance advises lenders to let homeowners at risk of payment shortfalls switch to an interest-only loan without an agreed repayment strategy. Borrowers will also be able to extend the terms of their mortgage payments without an affordability assessment and extend the mortgage term up to their retirement age.

I believe this will suppress the number of repossessed houses hitting the market, and may even lead to a number of properties which have recently been listed by owners worried about the affordability of their monthly payments, being taken back off-market as owners realise their monthly payments could now end up back at what they were pre base-rate rises.

I believe this is important news for landlords as fewer properties will be going on estate agent’s books and also fewer sales of repossessed properties at auctions, therefore keeping short-term prices stable, followed by significant growth over the long term as the government keeps the money printers switched on.

There is no doubt in my mind this is the government’s goal as every time a landlord passes away HMRC get to take a bigger slice of the ever-increasing value of their properties…. unless of course, they have been one of the many thousands smart enough to incorporate into a SmartCo and remove future growth from their personal estate.

If you wish to book a consultation with me personally to discuss how I can help you benefit from incorporation into a SmartCo please Click Here.



Comments

moneymanager

11:01 AM, 9th December 2022, About 2 months ago

The FCA' action, policy change, convenient political sleight of hand or what ever you choose to call it, renders mortgagees renters, possibly permanently and thus furthering the global plan to strip private asset ownership, we are living under cultural Marxism, mae no mistae.

Contended Ted

16:32 PM, 9th December 2022, About 2 months ago

Reply to the comment left by moneymanager at 09/12/2022 - 11:01
I see this as a good thing for society. It’s heart-breaking to lose your house over a setback in life. I see the landlords role as taking properties from deceased estates and bringing them up to date and up to a higher standard, not getting discounted houses from people whose lives are in retreat. Many people in insecure jobs can get into property knowing that there is a breather if illness or loss of job occurs.

Jonathan Chapman

16:54 PM, 9th December 2022, About 2 months ago

Reply to the comment left by moneymanager at 09/12/2022 - 11:01
If a mortgage has no repayment plan then whoever is liable for it will potentially pay interest on the loan until the day they die.

One has to assume this will eliminate the dream of retirement for many,... which i believe would be a favourable outcome for governments that are facing the crippling reality of an ageing population.

Smiffy

10:25 AM, 11th December 2022, About 2 months ago

I can almost see some logic to this. Why pay off the capital amount when it's growth is currently outstripping interest rates?

It's only when the annual increase in house values is less that the rate of interest, does it make sense to pay it off.

You could re-mortgage when the property value has increased by say 25%, retain 25% equity in the house and demand a lower interest rate.

Rinse and repeat.

Eventually you end up with a lower percentage mortgage having never physically paid any of it off.

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