According to a recent report by an insurance company, over half of borrowers with interest-only mortgages, some million homebuyers, have no repayment vehicle or savings to repay their mortgage loan .
Research by Liverpool Victoria indicates that as many as £66 billion of mortgage loans issued in the last five years during the period of booming property markets were provided with no formal agreement of how they are repaid. Experts indicate that this sector was one area in which reckless lending took plan.
Melanie Bien of the mortgage brokerage Savilles was reported in the mortgages news as commenting: "Many people went for interest-only mortgages with no capital repayment plans to keep monthly costs to a minimum and relied on bonuses to occasionally reduce their debts . With the downturn in banking and other sectors, many of them may be taken aback because they won't be getting bonuses next year."
How these borrowers will be affected in the medium to long-term depends on the mortgage market, interest rates and their personal circumstances.
No mortgage payment plan for a million
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