A new survey of mortgage advisors has found that they are experiencing rising levels of demand from their clients for interest-only loans, with close to half of them discovering this during the last 12 months.
This survey by Opinium shows that 44% of UK mortgage advisors have had more clients asking about interest-only loans within that time frame. These are mortgages where the borrower pays interest on the sum borrowed each month, with the total value of the mortgage being paid off at the conclusion of its term. It can be a way for people to buy while reducing their monthly repayments in the immediate period.
Opinium sought to find out what is behind the rising consumer interest in mortgages of that type. Over half (57%) indicated that reducing monthly repayments was the main factor. Smaller percentages cited difficulties in maintaining their standard mortgage payments as well as cutting their housing outgoings per month as reasons.
Alex Nightingale, the financial services head at Opinium, told FT Adviser that increased interest in them was not particularly surprising, given the pressures on people caused by the cost of living crisis.
He then went on to add:
“Despite the appeal, note that not everyone will be eligible for an interest-only mortgage and it can be tricky to qualify for.”
Talking to a professional mortgage advisor who holds a CeMAP qualification is a way for customers to find out if they qualify and what their other affordable options are if they do not.
