by Craig Evans
A response to today’s news story about interest-only mortgages…
I have a lot of sympathy for the ‘nearly a million homeowners’ who face losing their homes after opting for interest-only mortgages. I can also understand why more prudent borrowers and a lot of non-homeowners might feel differently; after all, who’d want to pay only the interest on a loan that they can’t afford to pay back in full?
The logic against it is very sound. However, so too is the logic in favour of taking out an interest-only loan: surely the lender wouldn’t give out hundreds of thousands of pounds at a time unless there was a clear plan for capital repayment – right?
I should probably now take a step outside this post and explain that it is not my intention to write about finance. This is actually an issue concerning language and communication. Having previously spent a number of years working in the mortgages department of a finance company, I can appreciate why people might put their faith in common sense when faced with the often opaque language of financial services.