Property News in the UK

UK property news and links to various property websites. mortgage news, house price news, interesting properties for sale.

Wednesday, October 11, 2006

The eternal mortgage trap

Millions of borrowers are heading for a retirement haunted by debt - because they have failed to pay off their mortgages in time. Around 70% of homebuyers start with a traditional 25-year mortgage. But with the average borrower now remortgaging every five years and one in three increasing the loan term at the same time, homeowners are running the risk of never clearing the debt and paying thousands of pounds in extra interest.

Research by comparison website suggests that the majority of borrowers increase the term of their mortgage to reduce monthly payments - often because at the time of remortgaging they are also increasing the size of their mortgage because they have moved to a bigger home or are consolidating other debts. But some borrowers simply do it to keep down costs and experts say this is an expensive error.

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