Interest-only mortgage payers ‘should switch to repayments’

Homeowners who are still paying money towards interest-only mortgage loans should consider moving to repayments to take advantage of the decreased interest rates, an industry expert has said.

According to Catherine Hearnden, director of MyMortgageDirect, the fact that many people who have interest-only loans have not converted to repayments is a problem.

“So many people said: ‘We will change to repayment once it becomes affordable.’ Well, if it isn’t affordable now it never will be. People could take advantage,” she commented.

Ms Hearnden added that people need to seek out independent advice in order to find the best rates and combinations of fees and interest, particularly because there are not as many deals as there were a few years ago.

Her remarks follow a recent report by Halifax, which revealed that the typical family spends 29 per cent of their disposable income on mortgage repayments each month, a fall from 48 per cent in the third quarter of 2007.

By Sarah Adie