Limits now with interest-only mortgages

28/03/2007

New data reveals that a fifth of all mortgage lenders are now in a position to make a budget with an interest-only mortgage loan, this is causing first-time buyers no options and not a chance on getting on the property market. There are many people who want to get on to the property ladder but inflation caused within the market is set to increase more and more daily making it virtually impossible for first-time buyers.

If an Interest only mortgage is for a short term and an adequate repayment valuable is in place, people feel there is a chance to get on the property ladder. From another perception borrowers mainly first-time buyers do not understand that this is not the way forward.

Today lenders are in two minds whether borrowers will be able to fund the interest-only mortgage loan; MoneyExpert put data forward. In 2006 interest-only mortgages faded in choice increasing by nearly 30 per cent.

The MoneyExpert chief executive commented: "Lenders are cautious about the rise in interest-only mortgages and those who do offer interest-only loans take precautions such as limiting loan to value ratios to 75%. Lenders also ask borrowers about how they plan to repay the loan as FSA regulation means they have to ensure customers are fully informed about the risks."

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