Recent analysis suggests that borrowers who have suffered reduced income because of the coronavirus crisis may be offered alternative options, with multiple mortgages open to them that provide an interest-only feature.
The financial information study conducted by Norwich-based finance specialists Moneyfacts Group showed that close to two out of three mortgage products now available allow borrowers to pay back no more than the mortgage’s interest for a set period.
Prior to the financial crisis of 2008, interest-only options were popular among many borrowers, but since then, the availability of these types of deals has been significantly reduced.
Purely interest-only deals currently account for a mere 3% of all available products on the mortgage market. However, many more loans offered now allow borrowers an interest-only option, providing that a practical repayment plan is first put into position.
Interest-only mortgages are designed to reduce monthly repayments, assisting borrowers financially by freeing up funds for spending.
A finance expert for Moneyfacts, Rachel Springall, commented that while there has been a drop in how many borrowers are currently using an interest-only mortgage, people struggling to manage monthly mortgage commitments during the coronavirus outbreak may now wish to switch over to a mortgage of this kind. She said:
“As borrowers come off mortgage payment holidays, more consumers could be debating an interest-only option.”
Springall added that using an independent financial advisor to secure the best possible deal for their circumstances during these difficult times would be a wise decision.
