Most people expect to be ‘mortgage free’ before retirement but the FCA estimate that nearly half of the 2.6m borrowers with interest only mortgages maturing in the next 30 years will have insufficient funds to pay off their loan- a scary position to be in!
Many people don’t even realise they will have this problem as they often forget what type of mortgage they purchased and where a mortgage is ‘interest only’, there is no reduction each year in the amount of capital owing. That can cause issues at the end of the mortgage term – as the lender needs their money back.
When the mortgage was originally set up, there may have had some form of savings plan in place to cover the capital repayment. However, with years of low interest rates and market volatility, for many, that repayment plan, (whether an ISA or endowment policy) may be insufficient to cover the mortgage.
It’s worth us checking your current arrangements – as better safe than sorry.
Riverside have been proactively contacting clients inviting them to review their mortgage arrangement. The response rate has been overwhelming. Feedback indicates that clients are happy to be contacted and reminded that reviews of their mortgage situation are an important feature of the overall financial planning service provided.
Since the banking crisis, we’ve seen more clients wanting to reduce their debt or restructure it onto historically low interest rates before rates rise again – as we see the Bank of England base rate of 0.5% as a floor.
If you wish to have a comprehensive mortgage review with one of our experts, then please contact us at
Typically we do not charge for this service and our initial meeting is always free of charge. Under certain circumstances, however, a fee of a maximum of £250 or 1% of the loan amount, if greater may be payable. Typically this will be £250.
Your home may be repossessed if you do not keep up repayments on your mortgage.