Mortgages---Looks Like Trouble Ahead For Borrowers With Interest Only Mortgages.
I have never really understood why mortgage borrowers ever opted for the interest only type of mortgage. Naturally the monthly repayment is cheaper as they are not paying back any of the capital. In the past I strongly suspect that many of these borrowers were duped by some unsrupulous mortgage brokers who sold the mortgage borrower the interst only product because the borrower simply believed it to be a cheap mortgage, and opted for the interest only mortgage based on it being an apparent bargain without realizing or having it explained to them that they were not going to be paying off a single penny of the capital.Some of these interest only mortgage borrowers most likely would be totally unaware of the need to have an insurance in place or a savings plan to pay off the capital. In these cases what can these unfortunante individuals do? Who can conjure up £100,000 or even often much more than this amount out of thin air?.Often, these borrowers choose the interest only mortgage without understanding the fact that interest only does in fact mean exactly that, ie. you are paying only the interest on your home loan, and at the end of the repayment period you still owe exactly the same sum as you originally borrowed.. Some of these were people who expected a large sum at retirement, people such as police officers, school teachers and so on. Others were relying on insurance pay outs to pay off the capital, but with insurance investments often performing badly the insurance payout may now be insufficient to clear off the capital sum owed on the mortgaqe. Other homeowners took out an interest only mortgage with the intention that at the end of the repayment period they would virtually be at the stage of their life at which they intended to sell their existing house, and move to a smaller cheaper property.They would then they thought have sufficient profit in their property to pay off the capital due on their mortgage. However, unfortunately for many this dream has not worked out due to the recent dramatic fall in the price of property. Unfortunately this dreadful scenario is now one that many interest only mortgage borrowers will have to face.
- Contact Information
- Liz Moir
- Champion Finance
- Contact via E-mail
This news content may be integrated into any legitimate news gathering and publishing effort. Linking is permitted.
News Release Distribution and Press Release Distribution Services Provided by WebWire.