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Interest-only mortgages 'good for young professionals'

Young professionals are a group particularly suited to becoming holders of interest-only mortgage loans, an advisor at Alexander Hall has suggested.

According to recent research from the Council of Mortgage Lenders, taking out a loan without specifying a repayment plan is becoming more widespread among first time buyers.

The proportion of these home purchasers was found to have risen from six per cent in 2002 to 20 per cent last year.

Andy Pratt, chief operations manager at Alexander Hall, commented: "If you know that you're starting off in a career where the salary is limited to start with but you're going to be coming into some bonuses later on…you can essentially use what you need to live on and pay off lump sums of the mortgage through what you build up.

"Instead of relying upon the lender to control the amount that they pay off on the loan, some feel quite knowledgeable and confident enough to pay the interest and control for themselves how much of the loan they pay off by doing it in lump sums every two or three years."

However, the loans expert warned that falling house prices could make them a much less advisable option.

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