8 Jun

Homeowners 'may be better off on repayment mortgages'

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.
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