First-time buyers should get mortgage savvy

21-Apr-2006

First-time buyers who are struggling to get their first foot on the property ladder may be tempted by an interest-only mortgage, according to latest research.

However, financial experts are warning interest-only mortgages could end up costing them an extra £12,000, according to new figures.

A survey by price comparison website Moneysupermarket reveals that over the last four years take-up of interest-only mortgages has doubled among first-time buyers.

Aspiring first time buyers considering affordable housing options should work with a good mortgage broker

Figures also show that house prices have risen by over 40 per cent in the same period so it is no wonder that aspiring homeowners are looking for creative ways to fund their purchase.

However, experts are now warning that first-time buyers who do not put money aside place themselves at risk should the property market collapse or stagnate.

Find out more about the housebuying process in the FirstRungNow Home Buyer's Guide

"I would whole-heartedly urge consumers to think carefully before taking out an interest-only mortgage - even if they are attracted by the lower monthly payments," comments Louise Cumming of Moneysupermarket.

She concludes that first-time buyers should only consider this type of mortgage if they are sure they will be disciplined enough to save money elsewhere.

Click here to see what properties are on the market in your area – whether you buy alone or with others

2008: May | Apr | Mar | Feb | Jan

2007: Dec | Nov | Oct | Sep | Aug | Jul | Jun | May | Apr | Mar | Feb | Jan

2006: Dec | Nov | Oct | Sep | Aug | Jul | Jun | May | Apr | Mar | Feb | Jan

2005: Dec | Nov | Oct | Sep | Aug | Jul | Jun | May | Apr | Mar