Whilst interest only mortgages can be attractive (I've even had one myself) they do leave the question of how to repay. If you plan to Remortgage onto a repayment product later then this might not look like an issue but it can be if your circumstances change.
I have seen many client's who faced repossession because they failed to properly plan for repaying this loan, or couldn't afford the monthly instalment when then did obtain a Remortgage.
The keys are:
1. seek proper independent financial advice;
2. if you are struggling speak to the lender;
3. if you are threatened seek legal advice sooner rather than later.
Nearly a million homeowners have no way of paying off their mortgages because they opted for interest-only loans, according to Citizens Advice.The new figure is much higher than previous estimates from lenders and from the City watchdog, the Financial Conduct Authority (FCA).Citizens Advice said 934,000 owners did not have a plan for how to pay back the money at the end of the mortgage term.It warned that time was running out for some to organise their finances.