People with interest-only mortgages could be in trouble if house prices continue to slide.
Homeowners with interest-only mortgages could be heading for disaster, according to a new report.
Mortgage advice firm Mform.co.uk claimed they were "storing up problems for the future" by switching to the loans, which are cheaper because only the interest on the original advance is repaid.
With a £155,000 mortgage at six per cent interest, you would pay £232,500 in total over the 25 years of an interest-only mortgage.
At that time, however, you would still owe the bank the full £155,000.
With a repayment mortgage, you would repay a total of £299,601 over 25 years but own your home outright when the deal ends.
Customers are supposed to invest money separately so that they can eventually pay off the debt - but many fail to do so.
The warning comes as Bank of England policy-maker Kate Barker predicted the credit crisis would make it harder for Britons to buy homes even if house prices fall this year.
Speaking at a housing and planning event, Ms Barker said: "We may see prices adjust downwards but there is no clear evidence that affordability will improve.
"Mortgages, particularly for first-time buyers, have become more difficult to get as a result of the credit crunch."
Banks are no longer able to access cheap cash and affordability constraints price out first-time buyers.
Francis Ghiloni from Mform said yesterday: "It is tempting to switch from repayment to interest-only.
"But unless borrowers have plans in place to eventually repay their loan, they may be simply storing up problems for the future.
"Getting to the end of the mortgage term and still owning the initial debt would be disastrous."
It came as the Council of Mortgage Lenders (CML) revealed banks were struggling to meet the mortgage demand in the face of the credit crunch.
NWN : The Bank of England had to bail out the Halifax/Bank of Scotland, yesterday. They have already bailed out the 'Northern Rock'. Other banks are taking advantage of the Bank of England too.
But will the Government help out the borrowers, you know, the public who have mortgages ?
Answers on a postcard to Gordon Brown, 10,Downing Street, London.