Warnings Issues Against Interest Only Mortgages
Moneysupermarket.com has issued a warning to all homeowners, cautioning them against converting their repayment mortgages to interest only mortgages in an effort to stave off the effects of the current economic climate.
Only last week, Lloyds TSB, via its Cheltenham & Gloucester arm, placed a ban on letting its own borrowers switch from repayment to interest only in a move that was seen to go against the recent government announcement that all mortgage lenders should make every effort to help borrowers avoid arrears and repossessions. Making the switch from repayment to interest only can be tempting for many as a £150,000 mortgage would save over £200 per month in this way.
Moneysupermarket.com warned that this temporary respite would only prove more expensive in the long run and the head of mortgages, Louise Cuming, warned it can be an expensive mistake if it is not absolutely necessary, and that borrowers should look at cut down on expenditure first in order to meet their mortgage repayments.
Posted on November 5, 2008
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