8
Jun
Homeowners 'may be better off on repayment mortgages'
Those who can afford to may benefit from obtaining repayment
mortgages as opposed to interest-only products, it has been
suggested.
According to an article in the Daily Mail, lenders are withdrawing
some of the better versions of the latter form of loan and are
increasing the interest they charge.
For example, Lloyds TSB has said it will charge an additional 0.2
per cent on rates for new borrowers who take out this type of
deal.
In addition, the firm has stopped providing interest-only products
for mortgages of more than £500,000.
David Hollingworth from Lonrepayment don & Country Mortgages
said: "I don't think we're seeing the beginning of the end of
interest-only deals, but lenders are wary and taking steps to cover
themselves."
In some cases, this is achieved by raising the permissible
loan-to-value ratio or by asking more questions, he went on to
note.
According to figures recently released by the Council of Mortgage
Lenders, the level of gross mortgage lending in the UK will add up
to around £150 billion this year.
