Interest-only mortgage builds trouble

Mike Mahon was having trouble renting out his buy-to-let apartment in Limerick City and contacted his bank to ask if he could restructure his loan, as he was falling behind in repayments.

That was five years ago and since then, Mike has been paying interest only. However, several months ago, the bank informed Mike, 67, that his loan was about to revert to capital and interest repayments.

He was stunned when he saw how much his repayments would rise: In 2007, his mortgage had cost him €500 per month, before dropping to €150 when it was restructured to interest only. Now it is €965 per month.