Interest-only mortgages are a useful tool for someone building a property portfolio in a rising market. It minimises the capital you have to invest, keeps the monthly payments down and allows you to expand more than would otherwise be the case. And, in a fast-rising market, after a couple of years, the property may well have enough equity in it to be leveraged into buying another property.
This works beautifully, and is a relatively easy and accelerated way to make a lot of money, providing you carefully pick your properties.
However, it is also a very good way to end up flat bankrupt if the property mrket collapses, and you suddenly find yourself with a large portfolio of property worth substantially less than you owe on it. And if anything happens to prevent you keeping up the payments and riding the drop out, well, you're in a mess.
So, it comes down to what the property market is going to do in the next few years. That, of course, is anybody's guess. Personally, I pulled out of the UK property market a year or more ago. Why? Not because I expected a collapse, but because the growth rate I expected was far inferior to that I could get elsewhere, and the risk of a collapse was getting uncomfortably high.
I am not a doom and gloom merchant. I still think a collapse is unlikely. But there's NO doubt in my mind that the property market is stressed in a way it has not been for quite some years, and a substantial shock to the market, perhaps even from an external source, could just provide the trigger a collapse in confidence needs to devastate the market. So in my view, a collapse isn't likely but is certainly possible.
And given that, I wouldn't be taking on interest-only mortgages at the moment. I don't, personally, see it as the way to buy your residence, and I'm not convinced it's a good time to be speculating on property.