Research suggests that around forty percent of all mortgages in Northern Ireland have been arranged on an interest only basis. Borrowers are simply paying the interest on their loan and the balance is not being reduced. At the end of the mortgage term the original loan amount still needs to be repaid.
This does not present a problem if there is a repayment method in place, an endowment plan or other investment, which provides sufficient funds. Unfortunately, many of these loans were set up without a repayment method, leaving borrowers with no way to repay their loan.
Most borrowers believed that increasing property prices would eventually allow them to sell their property and clear their loan, as well as making a healthy profit. Many Buy To Let borrowers saw this strategy as a way to repay their residential loan or provide funding for retirement.
Borrowers in this situation do have options, which vary due to personal circumstances and the criteria applied by lenders. Failing to address the issue may result in repossession.
It’s important to get advice as early as possible.
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