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Cost of living proves too much for many
As more households struggle to make ends meet during the credit crunch, almost 300,000 householders have decided during the last three years to switch from repayment mortgages to interest only.
The average saving each month on a mortgage of £190,000 is approximately £230 a month giving cash strapped families the money to afford household bills.
The worry that householders will not be able to pay the final debt off has become a concern for many economists who are worried that paying purely interest payments off is an unsustainable way to finance the cost of a mortgage in the longer term. The cost of living is rising considerably and many householders are looking at ways to trim their expenditure each month.
The FSA has also voiced its concerns that a never ending payment of interest only on a property that could also go down in value and caused them to consider ways in which to stem the flow of interest only mortgages to all but the very financially secure. The FSA said "Evidence suggests that interest-only mortgages have often been taken to extend affordability, with no firm plan in place to repay the capital” they went on to say "Our current view is that interest-only should be used only where there is a genuine repayment method in place." They suggest that interest only mortgages may be useful for those who are already in arrears and may need more time before their finances allow a repayment option.
The information contained within these news articles may include reference to taxation, legislation, regulation and other issues or concerns that may no longer apply.
Your property may be repossessed if you do not keep up repayments on your mortgage.
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