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When someone takes out an interest-only mortgage, their monthly repayments will cover only the interest on the mortgage. This means they’ll need a way to pay off the capital – the actual money they’ve borrowed – when their mortgage term comes to an end.

We hear from people who don’t think they’ll be able to pay off the capital. Some people are unhappy their lender won’t give them more time to make arrangements to pay off the capital. Others feel that interest-only wasn’t the right option in the first place.

need to know

  • If someone tells us there’s a problem with their interest-only mortgage, we’ll need to decide who’s responsible for what might have gone wrong. Depending on how the mortgage was taken out – and when – either the broker or the lender could be responsible for making sure the borrower would be in a position to pay off their mortgage.
  • We’ll look into whether someone was advised to take an interest-only mortgage – or whether they were given information to decide for themselves. If we decide someone didn’t receive advice, we might decide it isn’t fair to say the broker (or lender) is responsible for their choice.
  • If someone received advice about their mortgage, we’ll decide whether an interest-free mortgage was a suitable option at the time – rather than in their circumstances now.
  • If someone’s told their lender they can’t afford to pay off their mortgage, we’ll check the lender has responded sympathetically and constructively – even if they didn’t give advice about the mortgage. There’s more information about this in our approach to financial difficulties.
  • If we decide someone was wrongly advised to take out an interest-only mortgage – and they’ve lost out as a result – we’ll try to put them in the position they’d be in if they’d had a more suitable mortgage. That might mean telling the business responsible to refund some of the costs of the mortgage.

common complaints

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