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Mortgage gap growing on interest-only deals
19 November 2008 16:17
More than one million homeowners have no contingency plans to pay off the capital on their mortgages, research has shown.
An investigation by LV= found that nearly 550,000 mortgage holders are relying on house prices bouncing back as a way of paying off their home purchase loan.
What's more, the finance group also discovered that only one in five households have other investment plans in place to repay outstanding amounts on their mortgage.
Chief executive of LV=, Mike Rogers, stated that a previously booming housing market had led many homeowners to bank on selling their property in the future and use the excess to pay off their mortgage.
He added that the strategy has been severely compromised during the recent economic turmoil, which has resulted in some homeowners falling into negative equity.
A study by Rightmove earlier in the month found that many property owners were marking down their asking prices in a bid to make a sale during the credit crunch.
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