Is Your Loan a Time Bomb?

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Borrowers with interest-only loans have long been a concern for the Financial Conduct Authority which called them a ticking time-bomb in 2012 and their warnings still stand. The problem, it says, is that people do not have a plan in place to pay off the capital sum they borrowed when their mortgage expires. Although they are no longer as popular as they were during the property market’s boom years, they still account for about a fifth of outstanding loans and almost a quarter of them are held by lower-income borrowers. For City workers who earn big bonuses which are used to pay off chunks of the capital, there is no problem but for others the alternative is often to sell up to clear the debt.


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