Interest-only mortgages 'could be a good idea for certain young workers'
Published On 30 March 2008
Some people could find that interest-only mortgages are a good option for them, but it will depend on their personal circumstances, an industry expert has suggested.Andy Pratt, the chief operating officer at Alexander Hall, pointed to recent data figures from the Council of Mortgage Lenders (CML) which showed that more first-time buyers were opting for interest-only mortgages but did not have a plan in place to repay the capital.
Mr Pratt said that interest-only mortgages were "not something that a good advisor would recommend" in most cases.
However, he said that some young professionals who believe their incomes will increase significantly in the future might decide interest-only mortgages were a good option for them.
In particular, he added that city workers who expected large bonuses in the future were beginning to opt for interest-only mortgages.
"It's almost a little bit of a cultural change as well in the way that some people now think," Mr Pratt explained.
"Instead of relying upon the lender to control the amount that they pay off on the loan, some feel quite knowledgeable and confident enough to pay the interest and control for themselves how much of the loan they pay off by doing it in lump sums every two or three years."
