13 Mar

'More protection needed' for longer-term mortgages

'More protection needed' for longer-term mortgages

Consumers would be more likely to take up longer-term fixed-rate mortgages if they offered protection in case of unexpected life changes, according to Moneyfacts.

The independent financial website explained that homeowners who commit to a long-term mortgage may find themselves paying high early repayment penalties if their situation changes due to divorce, unemployment or illness.

Such a prospect may discourage people from choosing this type of home loan, which is being endorsed by the government as a way to keep first-time buyers on the housing ladder, it said.

Moneyfacts suggested that a clause to cover uninsurable life events could be introduced to long-term mortgages to make them "more appealing".

"If the government and lenders want to see an increased take up of these mortgages, then serious thought should be given to reducing the levels of uncertainty whilst still protecting profit margins," it stated.
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