Mortgage borrowers looking to reduce their debt have been urged to resist the temptation to switch to an interest-only package by a price comparison website.
Moneysupermarket.com has advised those considering of making the move – possibly in an effort to avoid bankruptcy – to do so as a “last resort”, as it will result in the cost of the mortgage increasing “dramatically” over the long-term.
Head of mortgages at moneysupermarket.com Louise Cuming acknowleged that many people may see interest-only mortgages as a way of making “some extra cash” available.
“Unless you really can’t afford to continue making repayments at the current level it could be a very expensive mistake,” she stated, adding that switching in order to fund their current spending habits should not be considered as an option.
The government recently announced the launch of an £11.5 million scheme to educate young people about the importance of managing their money, both now and later in life.