The UK economy is still shaking on some aspects. It is showing the effect on the everyday lives of the people. The interest-only mortgage is the latest chaos that is adding mess to the lives of many.
According to a study, by the end of the year 2020, there are 126,000 interest-only mortgages destined to reach maturity. However, only 60,000 are expected to be paid off.
Many borrowers are facing a financial crisis but have a repayment plan. On the other hand, some do not even have a schedule of paying off the funds. The stress for the lenders is that many borrowers are trying to avoid conversation with the lending companies.
The Reluctance of borrowers is making the mess bigger
In the fear of litigation or repossession, the borrowers are trying to avoid mortgage companies as much as possible. They are doing it because of their ignorance of the fact that such steps are the last situation that the lenders work on.
The mortgage companies want that if the fund bearers cooperate a bit, extreme actions can be avoided. Things can be smoother, as running away from the reality is not a permanent solution. If the ultimate authority is in the hands of the lending company to take the possession, what is the use of ignoring?
The reluctance and the situations of the loan bearers are sure to make the situation worst. Why to talk about 2020 only, even the coming years are expected to see the same storm of pending debts.
The total number of interest-only mortgages that are due to expire between 2021 and 2027 is larger than half a million. This significant figure is choking the risk capacity of the loan companies. If the funds remain unpaid, the long-term impact is sure to show on the mortgage industry.
Already, the interest-only mortgage lenders are not many. Not to mention, the level of high risk for finance companies is a big reason for this. To translate the threat in numbers, the tenure of over £200 billion mortgages will complete by the end of this year.
Lenders too need to understand
Sometimes borrowers try to face the situation and find a solution. They cannot do this without the cooperation of their respective lenders. The lending companies need to sit with their customers to bring a correct answer for both the parties. They need to compensate for each other during any problem. That is possible only through mutual contribution.