FTBs can benefit from interest-only deals

Posted: 22 Aug 2007 11:02:32 GMT

Interest-only mortgages can be a viable option for first-time buyers (FTBs).

Interest-only mortgages can be a viable option for first-time buyers (FTBs).

That is according to the Council of Mortgage Lenders (CML), which says that the deals can offer "financial breathing space".

FTBs are often pushed to their limits when they take out a mortgage, but by paying off the interest only, they are left with a bit more spare cash which can be put to good use.

"The main reason why someone would choose an interest-only mortgage is because their initial mortgage repayments would be lower than they would be on a repayment mortgage," said Christopher Dean, spokesperson for the CML.

"For a first-time buyer, that might be quite an attractive option because… [it] means they've got more money in their pockets to… buy new furniture, decorate their new house, or whatever."

Although interest-only deals do offer some breathing space for FTBs, it is vital that borrowers plan ahead properly.

This will ensure that they will not receive a nasty surprise when the interest-only term runs out and they are forced to start paying off the capital.

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