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Restriction on interest-only mortgages
Wed, 28 Mar 2007
According to new research into the mortgage market, a fifth of mortgage lenders are set to restrict interest-only mortgage loans, leaving first-time buyers with even fewer options for getting on the property ladder .

Interest-only mortgages are often seen as a way onto the property ladder, particularly if they are for a short term and an adequate repayment vehicle is in place. However, for many borrowers, particularly first-time buyers, this is just not the case.

MoneyExpert revealed that lenders are concerned over whether borrowers can afford to pay of interest-only mortgage loans . Interest-only mortgages soared in popularity during 2006, climbing by over 30 per cent.

The chief executive of MoneyExpert reportedly commented that: "Lenders are cautious about the rise in interest-only mortgages and those who do offer interest-only loans take precautions such as limiting loan to value ratios to 75%. Lenders also ask borrowers about how they plan to repay the loan as FSA regulation means they have to ensure customers are fully informed about the risks."

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