Interest only mortgages

Happened to my friend who was totally bewildered by the whole ending of her io mortgage looming and she couldn't afford a new repayment mortgage. She took equity release to pay it off.

Zonne yes you were right.

We did it, and have had to recently address this. Years of torment and realising that it’s upset our lives and spoilt it. We took one out in our early years and had the endowment policy to pay it off.wasn’t going to be enough. In the end our son has helped us but feel totally ashamed and can’t shake off the feeling of failure. Even though we’ve worked all our lives. We had planned to sell our home but there wasn’t enough equity to buy another house or flat outright awful dilemma.

A lot of people find numbers and finance very confusing and believe that if a bank tells them something is a good deal, that it is true.

Hopefully they will have an Endowment policy that should cover what`s left to pay of the mortgage.
If not they were ill-adviced imo.

Actually the banks should of been more careful in selling them so maybe its not one sided.

We sold our endowment policy when we switched to a repayment mortgage as it was calculated that we'd get less back than we'd paid in at maturity.
We'd been talked into it when young and naive. Maybe these pensioners were the victims of unscrupulous salespeople.

Thanks, i guess people have their reasons but it seems unfair to blame the banks for what is at best poor judgement on the part of the mortgagee.

In the 80s and 90s, many people were mis-sold endowment policies linked to interest only mortgages. I was told mine would pay off my mortgage and give me an additional
lump sum, which, it later transpired, was virtually impossible. I received some compensation, as did others. I’d already switched to a repayment mortgage by then.

Some people may have continued to believe their endowment would pay off the mortgage when it matured; some may have never been in a financial position to switch to a repayment mortgage.

I suppose if the property increases in value then they would gain when it was sold but then what?
They would never pay a penny of the capital amount so can't reduce the debt by paying interest only on the loan. So really it would be just like renting the property but cheaper if interest rates stay low?

We had one too. At one point it was almost impossible to get a normal repayment mortgage. We had an endowment policy to pay off the cost when the mortgage finished, but like rosie we swapped it for a normal repayment policy quite soon. We kept the endowment policy and it matured as we approached retirement.

You wouldn't take out an interest only mortgage at an advanced age the clue is in the title even if you could get one now they are tightly regulated.
We had one in our younger years as they were cheaper and suited us at the time my husband rebroked it a few years ago to pay off the balance in 10 years on a normal repayment mortgage.
They are mainly used now for buy to let properties

They were pushed heavily in the 90s. We had an interest only mortgage at one point. But we did have an endowment policy to pay the rest off.

Maybe they just kept remortgaging (for various reasons) and then too late realised that the last Mortgage they took out wasn’t going to be covered by the huge house prices rises that we have had in the past, which, unless you live in London or on the South Coast haven’t happened. The plan is usually to sell and move into a smaller and cheaper property in your retirement.
It’s easy to get swept into an interest only mortgage thinking that you can save up some money and then due to house prices rising so much you will be able to cover the whole amount at a later date.
We did it many many years ago but I think we had to take out an Insurance policy to cover the whole amount when the mortgage was due to be paid in full.
Nowadays I don’t think anyone would be advised to take out an Interest only Mortgage (at any age).