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Co-op Bank reminds interest-only clients to check repayment vehicles

The Co-operative Bank is launching a communications campaign to urge its interest-only customers to ensure they have an adequate repayment vehicle in place.

The lender is contacting all of its interest-only borrowers who have 10 years remaining on their mortgage term to make them aware of the options available to them.

It is also waiving all fees for interest-only borrowers who wish to extend their mortgage term or switch to a repayment mortgage.

James Hillon, head of mortgages at the Co-operative Bank, says: “Wherever possible we look to invest in initiatives that help our customers to manage their finances more effectively.

“By launching a regular communications programme and removing the fee for interest-only mortgage customers who switch to repayment or extend their term we want to encourage those who are worried about repaying their loan to take action.”

The Co-op will also be:

  • Contacting customers with less than one year remaining on their mortgage term at six months and one month before the end of their term;
  • Making annual contact with interest-only customers on the anniversary of their mortgage, and;
  • Sending communications every five years to all interest-only customers no matter how many years remain on their mortgage term.

Data from the Financial Services Authority shows that an estimated £120bn of interest-only mortgages are due for repayment over the next 10 years.

The latest Mortgage Market Review paper says that lenders should contact interest-only borrowers at least once during the lifetime of their mortgage.

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