Around one-quarter of all homeowners are using low interest rates to increase their mortgage repayme...
Around one-quarter of all homeowners are using low interest rates to increase their mortgage repayments, suggests research commissioned by the Council of Mortgage Lenders.
In some cases, borrowers have managed double their regular monthly repayments or pay one-off lump sums to reduce their mortgage.
However, just as many people are still borrowing money against their existing mortgages to either pay off other loans or purchase goods.
Nearly one in five flexible borrowers has used the facility to "draw down" equity from their home, says the CML, usually by withdrawing a single lump sum because borrowers tend to view this as a cheap loan, for home maintenance, or to clear other debts and spending on goods and services.
At the same time, almost half of all flexible mortgage borrowers have not used its "flexible" features so far, but this may have something to do with the demographics of the borrowers, who tend to be slightly older, findings suggest.
According to the research, borrowers with flexible mortgages are slightly older and earn more than average borrowers but are also financially astute and tend to research the market thoroughly before taking out financial products.
Their profile indicates that, in the current economic climate, they are unlikely to have difficulty with mortgage payments, or to accumulate unexpected housing debt and be vulnerable to possession, as nearly a third have savings of more than £10,000 and they make widespread use of company and personal pension plans.
Commenting on the research, the CML's Deputy Director Peter Williams says:
"Flexible loans have been rapidly growing in popularity, and the research indicates that this will continue in future. At the moment, many borrowers are showing a strong preference for lower risk by using flexibility to reduce debt. Looking forward, the research also suggests that more borrowers intend to make greater use of the features of flexible loans than they have done in the past."
Regular reminders and updates
9 December 2019 deadline
Joe McDonnell joins as head of portfolio solutions (EMEA)
Adviser of the Year - South East
Fidelity Multi Asset CIO's outlook