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Why you should be careful with interest-only loans

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Is an interest-only loan right for you? New banking regulations mean you need to be careful.

AMID the credit crunch that is dragging on house prices, it is tempting for borrowers to seek out interest-only loans to minimise their repayments and maximise the amount of capital they can access.

Professional advice is essential before deciding whether to take on such a loan, or opt for the traditional structure in which the principal and interest – known as “P&I repayments” – are paid.

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