Almost
a third of new mortgages taken out by first-time buyers and
remortgagers are now interest-only
mortgages, and the vast majority are
not linked to a specified repayment vehicle.
Experts are increasingly concerned this could lead to a fresh
scandal on the scale of the endowment
mortgages debacle, with many people unable to repay the
capital element of their loan at the end of their mortgage
term.
As a result, they could be forced to sell up or face repossession
by their mortgage
lender.
There are hopes that the Financial Services Authority (FSA),
which regulates mortgages, will step in with new rules to
prevent this, but it could be years before anything happens.
In the meantime, it remains each individual borrower's responsibility
to ensure they understand the costs and risks of what
they're getting into.
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