Property sale option needed for interest-only, experts say

Property sale should be a viable repayment plan for interest-only mortgages, experts say.  

Lending experts speaking at the Financial Services Expo in London have been debating proposals by the Financial Conduct Authority to change rules on interest-only lending.  

The regulator also says it may recategorise retirement interest-only mortgages to help older borrowers.

It is a move which has been welcomed by many who are coming to the end of their interest-only mortgage term.  

Legal & General development manager Marie Catch says: “We hope lenders will adopt this strategy as it would give customers more flexibility and choice.” 

But some experts say the proposals don’t go far enough.  

Shawbrook Bank head of networks Claire Rankin adds: “If there is a minimum equity position then some people are still going to be excluded and underserved. It will be interesting to see how this progresses, but any evolution is welcome.”  

The regulator’s proposals could see interest-only products separated out from equity release options. While some welcome the suggestion, others fear it could hit the equity income sector.

Age Partnership head of partnerships Adam Carnell says: “I think could have an impact on demand for equity release. It could allow lenders to move clients in volume without advice on an alternative product which may be a danger.

“It heightens the need for holistic advice so clients are fully aware of all the options before they decide.”

Mortgage Strategy this week asked advisers for their views on the proposals.

 

 

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