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Broker Talkback

Are interest-only mortgages not supported by a repayment vehicle a ticking time-bomb?

Yes “People do not realise that at some point the debt has to be repaid and, the longer they leave it, the worse it will get.”

Martin Bage, Martin Bage Financial Services

No “Not if you are following the correct advice. We are fully aware that it is a growing problem and the FSA is concerned about it. We are very cautious about advising clients to go into an interest-only mortgage.”

Colin Sefton, Robert Goodman Associates

Yes “One of the problems is the endowment scandal has meant that people are shying away from endowments, which are the best way of paying off these mortgages. This situation is the fault of the lender, which should insist on a repayment vehicle.”

Steve Ellis, STE Associates

No “If they are handled responsibly, I do not see a problem because sometimes it is the only way people can afford their property. There is far worse advice being given, like cases we hear of where 60-year-olds are taking on 20-year terms.”

Andrew Hayhurst, F Hayhurst & Co

Yes “An increasing number of people are trying to raise cheap money. This is becoming a mainstream way of buying a property but should really be the domain of an investment vehicle.”

Keith Pate, sole trader

Yes “But what alternative do some people have? When you get a mortgage, the object is to be able to repay it.”

Stuart Stojkavic, Sillars McLeod

Yes “I do not see a problem for young professionals but buy-to-let investors could be getting themselves into real trouble.”

Amit Parikh, AK Parikh

No “For many young people, it is the only way to get on the housing ladder. The increasing income multiples we are seeing are a much bigger problem.”

Hugh Pearson Gregory, Hugh S Pearson Gregory FCAMoney Marketing welcomes readers’ letters for publication. Letters should be sent to: The Editor, Money Marketing, 50 Poland Street, London, W1F 7AX.

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