Almost a third of new mortgages taken out by first-time buyers and remortgagers are now interest-only mortgages, and the vast majority are not linked to a specified repayment vehicle.
Experts are increasingly concerned this could lead to a fresh scandal on the scale of the endowment mortgages debacle, with many people unable to repay the capital element of their loan at the end of their mortgage term.
As a result, they could be forced to sell up or face repossession by their mortgage lender.
There are hopes that the Financial Services Authority (FSA), which regulates mortgages, will step in with new rules to prevent this, but it could be years before anything happens.
In the meantime, it remains each individual borrower’s responsibility to ensure they understand the costs and risks of what they’re getting into.
For more about this, read The true cost of an interest-only mortgage.
Read on about Interest-only mortgages
- Should I choose repayment or interest-only?
- How to change from an interest-only to a repayment mortgage.
- The true cost of an interest-only mortgage
- How to decide if you should get interest only
- Are interest only the new endowment mortgages?
- What’s the future for them?
- Best Buy Tables for Interest Only Mortgages UK
- Frequently asked / common questions about interest-only mortgages
- Read our complete guide to interest only mortgages
Read on
- What is an endowment mortgage
- What went wrong with endowment mortgages?
- What should I do with my endowment mortgage?
- How to make up an endowment shortfall
- Was I mis-sold my endowment mortgage?
- How to complain about an endowment
- Endowment mortgage claims: a legal loophole
- Can I claim endowment compensation?
- Am I too late for endowment compensation?
- Help making a complaint about your endowment mortgage