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Loan charges: Pensioners have four years to repay mortgages

Figures show that 52,000 people over the age of 60 have until 2016 to repay their interest only mortgages.

Credit agency, Moody’s, said that these people with interest only mortgages have 20 per cent or less equity in their homes.

Regulators have become more strict about interest only loan repayments and, over the next year, rates are predicted to rise. This means that it will be more difficult for these people to pay off their loans and could face eviction.

However, the Financial Times reported that elderly people are unlikely to face as strict consequences from regulators.

Interest only mortgages had become popular before the financial crisis because people only had to pay for the interest rather than the capital until the end of the loan terms, which initially made it easier for people to get onto the property ladder.

The Financial Services Authority will be placing repayment plans on interest only loans under scrutiny, expecting affordability reports to be produced in full. These rules will be applied from April 2014.

Amir Hussain

Amir specialises in personal loans, consumer debt and debt management.ADNFCR-2776-ID-801558568-ADNFCR

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