Mortgages Uncovered

According to the Council of Mortgage Lenders (CML),  the huge rise in interest only mortgages over the last few years has still not yet reached the number of interest only mortgages taken out in the early 1980′s.  The increase shouldn’t be a problem providing people remember to reassess the repayment options throughout the course of the mortgage.

Many people have taken out an interest only mortgage or even switched to an interest only mortgage just to make it more affordable.  However, interest only mortgages are meant to have a repayment vehicle running alongside them to pay off the mortgage at the end of the term.  Many people have nothing.

Bernard Clarke at CML said that taking out an interest only mortgage without a repayment vehicle in place is a:

“perfectly rational approach as long as the borrower is fully aware of the consequences and reappraises the need to put in place a plan for the repayment of the capital over the course of the loan”