Interest only mortgage borrowers face average of £77k debt

By Natasha Adamson

A debt recovery group says that interest-only mortgage borrowers in Northern Ireland and the rest of the UK will on average be saddled with a £77,000 debt once their loan term ends, and suggests that nearly a half of borrowers can not afford to discharge the debt, or have no plan in place to deal with it.

As the name suggests, interest-only mortgages involve only the repayment of the interest that accumulates on the property loan, and are usually accompanied by some form of other repayment vehicle, such as an endowment investment policy, to deal with the repayment of the capital at the end of the loan term. However, the research by Ascent Performance Group suggests that 33 per cent of expiring interest-only borrowers don't have a plan for the repayment of the capital sum, with a further 15 per cent saying they simply cannot afford to repay the amount when the term ends. Approximately 11 per cent say they will have to sell their property and move to a smaller home in order to repay the money, and 7 per cent will remortgage.

The debt recovery group says that among it's customers, the average debt on an interest-only mortgage with 3 years left to run us £77,000. It is estimated that 600,000 mortgage borrowers in Northern Ireland and the rest of the UK have an interest-only mortgage that will mature in the next 6 years.

If you are buying, selling or remortgaging a house in Northern Ireland, and require a property conveyancing solicitor to handle the legal process for you, contact Wilson Nesbitt in Belfast by calling 0800 840 9290.