Nearly one million people will face difficulties paying off their mortgages when their term for interest only mortgages comes up according to a story by the BBC that you can read here. Should we be scared and will this affect your home insurance in any way?
The first thing to consider is the home insurance question as that is what The Property Insurer is an expert at. If you have a mortgage of any kind, whether interest only or capital and interest, you will be required by your contract with the lender to have home insurance in place.
Home insurance is not typically mandatory in the UK but this is a legal contract you have with your lender and that means you need to do what you have agreed and put insurance in place. Quite apart from the actually contract to have home insurance, as your home is usually your biggest financial commitment and asset, it is well worth having home insurance for your own financial protection and peace of mind.
The prices of home insurance will not change one bit regardless of your mortgage situation. That’s the good news – you will not be penalised or given any favouritism regardless of mortgage position and that means you can possibly save money on what you pay right now by visiting The Property Insurer.
Simply visit the website, fill in the forms and compare prices from the best UK home insurance specialists online and buy when you are ready, it couldn’t be easier.
In terms of worrying about your interest only mortgage and how you will repay that at the end of the term, that is a different kettle of fish. When buying you should have been aware of what you were doing and put in place an ISA or other investment or saving to help pay it off at the end of the term.
However, if you haven’t then you should start putting money away now. If that doesn’t fit for you, then you can consider that when the term is up you simply buy another mortgage for a period of time and extend it further.
Alternatively you could sell the house and providing there has been house price inflation the difference between your purchase and selling price will give you a financial boost to either put a deposit down elsewhere or give you money for rental payments.
It’s not all doom and gloom and before all of that you can save on your home insurance as well!