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Interest-only mortgage 'an option for the debt conscious'
27 March, 2008
Switching to an interest-only mortgage is a viable option for those who fear they might struggle with their payments, one industry body has claimed.
Bernard Clarke, communications manager for the Council of Mortgage Lenders (CML), explained that as long as consumers go in to the switch with their eyes open, they should not face any problems.
He said: "If they're taking it [an interest only mortgage] from an informed point of view then there isn't a need for concern about that.
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"If borrowers are taking opportunities later when they remortgage to address the problem then that's fine."
He added that people who switch will need to plan how to pay back the capital on the loan at some point.
Opening a savings account or returning to a repayment mortgage in future are two ways of doing so, he concluded.
Research by Mform.co.uk found that almost a quarter (24.5 per cent) of secured loans advanced in January 2008 are on an interest-only basis.
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