Partnership launched to help interest-only customers

Partnership launched to help interest-only customers

A partnership has been launched to help lenders with customers on interest-only mortgages that are at or reaching maturity.

The asset management company Spicerhaart Corporate Sales has joined forces with fact-finding firm Excel and UK law firm TLT to create a solution for lenders and customers with no plan in place to pay off their mortgage.

The firms will look at the customer’s financial situation, the property value and the mortgage market and aim to deliver a ‘clear strategy’ for the lender within 90 days.

Options for consumers could include a repayment plan, conversion, a remortgage, a property sale or litigation, but the partnership said both the customer and lender would be engaged throughout the journey to resolution.

In May 2018, UK Finance reported there were 1.7m interest-only mortgages outstanding in the UK with around 200,000 due to mature by 2020. The partnership aims to help those customers who do not have a plan in place to deal with their debt.

The partnership stated the combination of Excel, with experience in face-to-face engagement and fact-finding, and Spicerhaart, which can assist the customer from the retail angle, would ensure customers find the best solution.

Dave Miller, client account manager at Spicerhaart Corporate Sales said: "Over the past few years lenders have successfully implemented a wide range of strategies to contact their interest-only customers.

"However, a proportion of those who are often the most vulnerable of customers, are still failing to engage, while many others are now past their term expiry date with no formal agreement in place for resolution.

"With arrears and repossessions at a historic low, it is evident that lenders are seeing greater success now than ever before in terms of engaging interest-only customers. But there are still many customers either unable or unwilling to engage which presents a real challenge for lenders.

"That is why we have created this proposition — we are able to combine all the expertise needed to be able to find the best solution for both lenders and their customers."

David Hollingworth, director at L&C, said: "Interest only is a serious issue and one that isn’t going to go away by itself.

"It’s important that the market continues to deliver the right messages to educate and help borrowers deal with any likely shortfall sooner rather than later.

"Lenders will of course potentially need a range of solutions at their disposal with the aim of keeping homeowners in their property wherever possible."