Recent research from the Financial Conduct Authority (FCA) has
found nearly 1.3 million interest only mortgage customers may find
themselves with a shortfall situation at the end of their loan
term. While the majority of interest only borrowers have a payment
plan to cover any shortfall, there is still a significant minority
who have no plan in place and who may not be fully aware of the
scale of the gap they face. Although the amount varies from
borrower to borrower, the FCA puts the average deficit at just over
For these people, equity release may provide a solution to their
shortfall, and an alternative to downsizing. However, it is
important for those looking into equity release to seek specialist
advice. Equity release is a complex product with significant
financial repercussions and it is crucial to understand the full
implications before embarking on a scheme.
Rightly, it has been pointed out that mis-selling is not the
cause of the problems with interest only mortgages. Lenders adhere
to strict guidelines and informing borrowers of the need to create
a plan to payback their debts is standard procedure. That said,
there does appear to be a portion of people who haven't fully
appreciated the implications of an interest only agreement.
Involving a specialist would reduce the risk of borrowers failing
to understand the importance of adhering to advice, as their
in-depth knowledge would allow them to better explain the benefits
and consequences of their undertaking. When committing to financial
products of the magnitude of a mortgage or equity release product,
specialist advisers and expert lawyers are fully equipped to ensure
all parties understand the agreement and should be the first port
Read all our roles and our responsibilities
- We will communicate in plain English, not legal jargon.
- Clients will receive fair and balanced reports in writing.
- Clients will receive a personal consultation with a suitably
qualified member of legal staff.