The Interest – Only Timebomb

News stories are starting to emerge about what’s being called the interest-only mortgage time bomb. Almost a million people have interest-only mortgages with no plan in place to repay the capital at the end of the term. I was alerted to this by reader Tony Cater who thinks he’s spotted an opportunity. And he could be right.

Tony points out that there is a  buy-to-let style opportunity as one of the range of solutions to this problem. The crux of the idea is that when the capital falls due for repayment, the house is sold to a buy-to-let landlord who rents the property back to the current ‘owners’.  Perhaps there is a business model that combines security for the occupants and an income stream for the new landlord.

This has hallmarks of equity release schemes, which tend to get a bad press, but I think that’s more to do with the implementation (and the people offering it) rather than something intrinsically wrong with the idea. If you can come up with a mutually beneficial arrangement, this could be an excellent opportunity with almost unlimited potential.

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