13
Mar
'More protection needed' for longer-term mortgages
Consumers would be more likely to take up longer-term fixed-rate
mortgages if they offered protection in case of unexpected life
changes, according to Moneyfacts.
The independent financial website explained that homeowners who
commit to a long-term mortgage may find themselves paying high
early repayment penalties if their situation changes due to
divorce, unemployment or illness.
Such a prospect may discourage people from choosing this type of
home loan, which is being endorsed by the government as a way to
keep first-time buyers on the housing ladder, it said.
Moneyfacts suggested that a clause to cover uninsurable life events
could be introduced to long-term mortgages to make them "more
appealing".
"If the government and lenders want to see an increased take up of
these mortgages, then serious thought should be given to reducing
the levels of uncertainty whilst still protecting profit margins,"
it stated.
