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Ni Interest Only Time Bomb

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20% of ALL NI mortage holders will struggle to pay the mortgage off at the end of their term.

Interest-only mortgage shortfall 'big problem' for NI

More than half of people in Northern Ireland with interest-only mortgages will struggle to pay off the lump sum at the end.

Forty per cent of mortgages in Northern Ireland are interest-only.

However, because the housing crash was steeper and faster than the rest of the UK, more people in Northern Ireland have found themselves in negative equity.

The average shortfall could be up to £72,000.

The problem for a lot of people was caused by the assumption that they could get a mortgage, just pay off the interest and their house would continue to gain in value.

If necessary, they could sell the house to pay off the mortgage.

Regulator

However, the housing crash has meant a huge percentage of people are now in negative equity.

Many on interest-only mortgages now face the prospect of a sudden, dramatic rise in payments, as they start paying off the capital, when their mortgage term ends.

The figures have been revealed after the city regulator, the Financial Conduct Authority, (FCA) issued a warning about interest-only mortgages.

It said hundreds of thousands of people throughout the UK would struggle to clear their loans.

Some 2.6m UK householders have the mortgages but the FCA said "estimates... suggest" nearly half will not have savings or other funds to cover the final bill.

Lenders will now step up warnings to homeowners to prevent payment shocks

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this article could well be accurate but it appears to be based on 1,000 phone calls in the UK and multiplied up. 10% of those interview (100 people) stated that they had no separate plans to repay the capital. It is not clear is any of these 1,000 people interview were from NI.

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this article could well be accurate but it appears to be based on 1,000 phone calls in the UK and multiplied up. 10% of those interview (100 people) stated that they had no separate plans to repay the capital. It is not clear is any of these 1,000 people interview were from NI.

The NI sample is so tiny as to be meaningless - 15 people. But I don't doubt it's a problem in NI, particularly as the terrible negative equity issue here means that the obvious escape route is closed off for many. IO was being punted to desperate FTBs in the mid 2000s with a long term plan which wasn't much more than 'something will turn up.'

http://www.fca.org.uk/your-fca/documents/research/interest-only-mortgages-gfk

Edited by PJ1977

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  • 238 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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