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Struggling mortgage holders `should seek advice` Remortgage enquiries `rise in June` Mortgage approvals `up in June` UK mortgage market remains weak, CML says Consumers `should avoid lying on mortgage applications` BoE releases Trends in Lending report Brits `prioritising debt repayment` "Sensible lending" needs to be restored for home buying Many households `to miss mortgage payments` Homeowners `increasingly paying off mortgage debt` Booklet produced for those facing mortgage repayment problems Local authority defends decision to offer 100% mortgages Mortgage lending levels `still low` CML welcomes campaign on repossessions Consumers `increasingly offsetting savings against mortgages` Banks `should be encouraged to provide more mortgages` Younger and richer people `benefiting more from mortgage reductions` Bank of England cuts base rate Negative equity `concerning UK mortgage holders` Interest rate cuts `were not anticipated by consumers`

`Extra dimension of risk` with interest-only mortgages

03/10/2007

Homeowners looking to take out interest-only mortgages are adding an "extra dimension of risk" compared to those taking out standard mortgages, an industry expert has claimed.

Despite uncertainty in the financial markets due to the recent Northern Rock crisis, homeowners should look to avoid "unnecessary" risks with their home loans, Re-Financial Planning said.

Switching to traditional capital repayment schemes keeps the liability of the mortgage lender "exactly the same" and increases security on the loan, David Higgins, director of Re-Financial Planning, said. He added that the risk with interest-only loans is higher than the old endowment mortgages.

Mr Higgins commented: "Mortgage lenders are more lax than they`ve ever been. The high property prices have lulled them into a false sense of security. They know that even if the person doesn`t have the means to pay off the mortgage that they have adequate security."

According to figures from Credit Action, the average outstanding mortgage on a house in the UK is £97,209.

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