13:22 02 May 2013
A warning has been given to homeowners over interest-only mortgages, it has emerged on Thursday, 2ndMay.
The City watchdog the Financial Conduct Authority (FCA),has claimed that 1.3million homeowners may not be able to afford payment for the interest-only mortgage when it matures, as referred to in one report by The Guardian.
This comes after the FSA carried out research on the matter.
The regulator found that as many as 2.6million mortgages of this kind will come to the end of their span from 2013 until 2041.
Based on their findings, the FCA has urged that action should commence with regards to interest-only mortgages.
The Chief Executive of FCA, Martin Wheatley, said: “Mortgage lenders have volunteered to contact their most at-risk customers with a 'wake-up call'… My advice to borrowers is to not bury your head in the sand – take action now.”
However, even though the watchdog is relating to its recent research, it has said that this type of mortgage works for the right individuals.
The way an interest-only mortgage works is by a person agreeing to make payments monthly for the interest, but no capital repayments. A borrower is to ensure they have investments operating in order to complete payment at the end.
These types of mortgages have benefitted many Brits in the last 20 years when it comes to getting a property. Reportedly, they have become a focal point for regulators of late it seems.
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