There has been a lot in the news recently about people taking out 'interest' only mortgages, and being left at the end of the term without enough funds to actually acquire ownership of the property.
Some twenty years ago I accompanied someone who was applying for a house
mortgage from the Abbey National (taken over by Santander).
The applicant said in the interview that she wanted a 'repayment' mortgage.
She had a very good regular income with a well established company, and so
she well qualified for the house mortgage she was applying for.
The Person in the interview at Abbey National *tried* to steer her towards a
'interest' only morgage instead of the repayment mortgage she was wanting.
She said she particularly wanted the repayment mortgage, so that in the end
is what she got.
What would have been his motivation for trying to sell the 'interest only'
instead of a 'repayment' mortgage.
How would the lender have benefited financially or in any other way, by
steering the applicant towards the 'interest only' option?
- posted 6 years ago