More borrowers turn to interest-only

More borrowers are switching to interest-only mortgages to reduce their mortgage repayments.

Data from the Council of Mortgage Lenders showed around 24% of first-time buyers were taking out interest-only mortgages.

Many borrowers were taking out interest-only to reduce monthly bills.

A few words of advice from an Independent Mortgage Adviser ( i.e me, the blogger )...

Moving to interest-only repayments on your mortgage will help reduce your monthly costs.

It will be tempting for the 1.4 million borrowers whose fixed-rate deals are coming to an end this year. Many of them are on deals as low as 4.23% and with the current average fixed rate of 6% they face serious payment shocks.

However, borrowers may be storing up problems for themselves and should consider the move carefully.

However tempting switching from repayment to interest-only may be, unless borrowers have plans in place to eventually repay their loan they may be simply storing up problems for the future.

Getting to the end of the mortgage term and still owing the initial debt would be disastrous.

Think very carefully before making such decisions. Better still, talk to me and we can discuss your options fully, without obligation and without pressure.

After all, that's what I've been doing for the last 27 years !

As always, if you have any doubts about your current or proposed situation, and want to contact me, just click the link to my website on the right hand side of this page to get my contact details.

Negatives, positives, and ponderings.

What an interesting start to the day.

The first emails of the day announced that one of the leading commercial lendrs in the UK, Commercial First, had stopped lending immediately due to its failure to raise funds on the securitised money markets. They have put all its staff on Consultation (which means immediate notice that redundancies are likely to be made).

This was followed by Mortgages PLC (owned by the US firm Merrill Lynch) announcing late yesterday that they are withdrawing from the Prime Buy-to-Let mortgage arena, which is surprising as most other lenders are only reducing their exposure to risk by reducing the amounts they will lend on individual properties (typically from 85-90% maximum down to 75-80% maximum). Saying this, 85% loans are still available, for purchases and re-mortgages, but who know how long this will last for.

Following this was a news report that house prices are expected to fall (again) by up to 20% in the next two years, but a full blown recession is not expected.

If I was feeling negative, this group of news stories would seriously upset me, but I find the phone keeps ringing, and people still want to move, re-mortgage, buy an investment property (now is a great time to buy for investors!), so I cannot complain too much.

If we all keep a positive attitude, and concentrate on our own little worlds, we're not affected by what's apparantly happening in the wider world.

It works for me !

I had my regular visit from my Compliance manager today. We went through the business activities and he did his usual checks. I'm glad to report that nothing is untowards* within my business and I can carry on trading, giving advice and doing what I do every day - still !

* Writing this, I thought what a strange word 'untowards' actually is. I was prompted to search for it's definition, which is:

Definition of untoward

1. contrary to your interests or welfare; "adverse circumstances"; "made a place for themselves under the most untoward conditions"
2. not in keeping with accepted standards of what is right or proper in polite society; "was buried with indecent haste"; "indecorous behavior"; "language unbecoming to a lady"; "unseemly to use profanity"; "moved to curb their untoward ribaldry"

Similar Words: adverse, harmful, inauspicious, indecent, indecorous, unbecoming, uncomely, unseemly

It's so rare for this word to be written down, although we use it in everyday speech, it made me stop and think.

It's good to ponder such matters once in a while!

Tomorrow's thing to ponder:
Why is it called a building when it's already built?