If the customer has an interest-only mortgage, this debt does not get paid off until you reach the end of the mortgage, meaning the amount you repay could be twice the value of what you've spent.In the event an individual needs cash, for example for home improvements, brokers offer to add the amount on to their mortgage, but this comes with hefty broker and arrangement fees that can almost double the cost.He also said that specialist sub-prime brokers who potentially mis-sold products could potentially avoid compensation by claiming to have had no knowledge of the criteria lenders look for when approving mainstream mortgages.
Customers are sold interest-only mortgage products without checks being made on the repayment vehicle they in place for when the mortgage matures to ensure it is adequate, or simply were not told they needed a repayment vehicle in place.
Similarly people who are on repayment mortgages they can no longer afford remortgage onto an interest only, again without being aware of the implications.
However, consider the extended life of the loan as well as the additional closing costs and interest payments extended over the new term.
Most lenders have a waiting period before you can get approved for a refinance combining your first and second mortgages.
Some brokers, Money Boomerang claims, do not take into account the financial cliff facing those who take on a mortgage that will run beyond their retirement, when their income is likely to drop significantly.