Openwork Encouraging Capital Repayment Home Loans

Thu, 01 Jul 2010

Britain’s third largest mortgage introducer Openwork has launched a campaign aimed at encouraging interest only borrowers to switch to different loans which repay capital as well as interest. The campaign is being launched in conjunction with several lenders, including C&G, Halifax, Lloyds TSB Scotland, Nationwide, Scottish Widows and Woolwich, amid fears that many interest only borrowers have no capital repayment plans in place.

As part of the campaign, borrowers will be able to switch from interest only home loan deals to capital payment loans without having to pay a fee. Mortgage, protection and general insurance proposition director at Openwork, Paul Shearman, acknowledged that it is necessary for many borrowers to remain on the cheapest available option owing to tight finances, but claims that an interest only mortgage is only £51,000 cheaper than a capital repayment mortgage over the lifetime of the loan – a surprisingly low figure given the amount typically being repaid.

Mr Shearman also noted the importance of borrowers repaying capital rather than just interest, as a large number of interest only borrowers contributes to banks and lenders having a risky loan portfolio.
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