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Mortgage & Finance

The dangers of interest only mortgages

30 August 2008, DirectSpace Ltd.

On interest-only mortgages the borrower merely pays the interest due each month and the entire capital borrowed from the lender is repaid as a lump sum at the end of the mortgage term. This means that monthly payments are lower than they would be for a repayment mortgage making it a more affordable option for some.
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Current rate: 2.00%
Last change: 4 Dec 2008
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Next review: 8 Jan 2009
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Interest rates are now at their lowest levels since 1951. As the government desperately attempts to avoid a prolonged recession in the UK, interest rates are likely to fall further over the coming months. The US rates have been cut to 1% and with oil prices declining and UK inflationary threat easing, the Bank will be under pressure to cut rates again early next year. Don't be surprised if they drop to as low as 0.5% by June.
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