Interest-only borrowers are being offered a new lifeline by a not-for-profit organisation.
Portsmouth-based Parity Trust is offering vulnerable homeowners a new mortgage extension product.
The product is aimed at helping those coming to end of their interest-only mortgage term. It allows homeowners to take out a new tailored loan through the organisation.
Parity typically offers home improvement loans to vulnerable people in Portsmouth and surrounding areas as far as Hampshire and Sussex.
Now the organisation has created a new product after noticing there was demand for an alternative option for interest-only mortgage holders without a repayment vehicle in place.
Citizens Advice Bureau data suggests up to a million people could be in danger of having their home repossessed because they have no way of paying off their interest-only mortgages.
Parity’s mortgage extension product allows homeowners to stay in their property with a tailored package. Typically, the product will be part interest-only and part repayment, to help borrowers reduce the amount they owe.
Parity determines eligibility through a financial review. Customers are usually older borrowers with a large proportion of equity in their home.
Parity says the product is best suited to those owing £60,000 or less. The interest rate is 5.99 per cent, with a typical term of 20 years.
Parity Trust chief executive SJ Davis says: “We are increasingly aware of the escalating problems of interest-only mortgages and the challenges that thousands of homeowners face in funding the capital.
“Parity Trust has traditionally sought to support those who cannot get funding from mainstream lenders and we have developed this product to plug the gap in the market.”