Interest rate rise will put homes at risk
More than one in three UK homeowners fear a rise in interest rates will make it more difficult to pay their mortgage or other bank loans or debts.
And almost two-thirds of those who have an interest-only mortgage say they will struggle financially if interest rates rise, making them the most financially stretched group of homeowners, according to research by the HomeOwners Alliance and Myhomemove.
Aspiring homeowners are also worried about interest rates, with 54% saying they fear interest rate rises will make it harder to afford payments on loans and debts.
Fears of hikes in interest rates are greatest among younger homeowners, with 49% of 25-to 34-year-olds saying it would be difficult to pay off their loans and debts as compared to 24% of those aged 55 and over. However, elderly savers commented that while they would welcome interest rate rises, they did worry for their children.
Paula Higgins, chief executive of the HomeOwners Alliance, said: "Homeowners are already really struggling to make ends meet and millions could be pushed into real financial hardship when interest rates start to rise. It shows just how severe the cost of living crisis is that a rise interest rates could lead to some homeowners struggling to afford food or being forced to sell their homes. The Bank of England needs to tread very carefully to avoid causing widespread financial difficulties."
Dough Crawford, chief executive of conveyancing provider Myhomemove, added: "If you are worried about rising interest rates, we'd recommend you talk to your mortgage provider now and maybe consider fixing your mortgage to provide greater certainty over the coming months and years. Interest rates could begin to rise as soon as November of this year. Christmas could be a tough time for the thousands of homeowners who are already on tight budgets."
A loan in which the borrower pays only the interest on the sum borrowed for the life of the mortgage but, at the end of the mortgage term, they still owe what they originally borrowed as this remains unchanged. The advantage of an interest-only mortgage is the monthly repayment is considerably lower than for a comparable repayment mortgage. Lenders generally insist the borrower also invests in an endowment, ISA or pension savings policy that, on maturity, is intended to pay off the capital loan.
The branch of law concerned with the preparation of documents for the buying and selling of property (or remortgaging), always handled by a qualified solicitor. The conveyancing process covers many of the legal aspects of the sale/purchase/remortgage such as land registry, local authority searches, freehold and leasehold status, title deeds and much more.