First-timer buyers ’should listen to Bank’s warning’
February 16, 2008 by admin
Filed under News, News-Mortgages
First-time buyers who have taken out interest-only mortgages should reduce their loans following the Bank of England’s (BoE’s) prediction of economic depression, one financial expert has claimed. 
According to Fool.co.uk, those who have taken out interest-free mortgages to get a first foot on the property ladder could face bleak financial times ahead, as lenders tighten their financial belts.
David Kuo, head of personal finance with Fool.co.uk, said that the BoE’s Inflation report should set “alarms ringing” in the ears of first-time buyers.
“In future, lenders may tighten the credit-scoring criteria and choose to reduce the maximum loan to value (LTV),” he warned
Mr Kuo added that: “This will put borrowers who have taken out 90 per cent mortgages at risk, especially if the value of their homes decline sharply when they remortgage.”
Fool recommended that making overpayments as, according to its calculations, every £1,000 of those will reduce the loan by the same amount and reduced the interest bill by £1,500 over 25 years.
Meanwhile, according to the Royal Institute of Chartered Surveyors, house prices have reached their lowest point since the crash during the 1990s.
