Interest only mortgages could soon be a thing of the past, according to a new report released by the Intermediary Mortgage Lenders Association (IMLA).
The IMLA has stated that building societies and banks may soon abandon the practice of interest only mortgages if further stringent regulations for the product are implemented by the FSA
The FSA has already proposed new rules regarding interest only mortgages, which would mean lenders have to assess the affordability of the loan on a repayment basis instead of an interest only basis, as well as carrying out yearly checks that borrowers actually have an affordable repayment method in place.
The IMLA, however, says that such stringent checks are unnecessary, and introducing an updated affordability test is more than enough regulation than is already needed. Peter Williams, the director of the IMLA, is warning the FSA that its attempts to create a more flexible market for borrowers could result in the exact opposite.
"The FSA needs to find a balance in what it proposes," Williams cautions, "so that lenders are still able to offer interest only loans and thus meet a diverse range of customer needs."
Interest only mortgages have already come under fire from lenders, with Lloyds saying it will begin carrying out spot checks on mortgage brokers to check that customers are actually financially able to repay their loans. In July this year, only 18% percent of mortgages were interest only, compared to 83% back in 1988.
This article is not intended and does not in any way provide advice. If you require professional Independent, whole of market mortgage advice you must speak to a qualified mortgage broker.
Good Mortgage Advice Could Save You £££s
Lets hypothetically consider if you could reduce your mortgage repayments by just £20 per month spread over 25 years. This would total £6000 that has remained in your pocket, which I am sure you will agree is a substantial amount. If you think it is worth 5 minutes of your time then read on!
Remortgage & Save a few quid on Interest - WHY Bother?
We all spend the majority of our time at work or with the family, with very rarely any time left over for anything else. So the last thing in the world that we want to do is spend an evening talking shop with a mortgage broker.
Who Needs a Mortgage Broker!
Who needs a mortgage broker, all they do is borrow your watch to tell you what the time is. The data base of mortgage lenders and products that they have access to is no different from what you or I could find out for ourselves. Anyway my bank is really help full and the adviser there will bend over backwards to help me.
