Interest-only mortgages ‘suitable for young workers’

The number of people using interest-only mortgages is not an “extreme position” for the market, it has been claimed.

Mortgage advice firm Alexander Hall said that interest-only options may be appropriate in some cases where affordability is an issue, although it is not something to be recommended as a first consideration.

According to the Council of Mortgage Lenders, the proportion of first-time buyers with an interest-only mortgage who do not know how they will repay their loan has risen from six to 20 per cent in the past five years.

Andy Pratt, chief operations manager of Alexander Hall, said some borrowers feel confident to pay the interest and “control for themselves how much of the loan they pay off”.

“It doesn’t necessarily mean they’ll be winners in terms of beating the lender and the interest rate, but they feel a little bit more in control as they know they can do it whenever they want,” he added.

According to Alliance & Leicester, property ownership is still a priority for those under 30, despite ongoing concerns about mortgage affordability.

© Adfero Ltd

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