Millions rely on loans and credit to pay mortgage or rent

Wednesday, 04 January 2012 11:54

Homeless charity Shelter has released a report that suggests millions of people are relying on loans and credit to pay their mortgage or rent.

It discovered that almost a million Britons have taken out a payday loan in the past 12 months to keep a roof over their head, while around seven million are using unauthorised overdrafts, standard loans or credit cards to cover such costs.

Shelter has warned this could cause a massive increase in homelessness and urged anyone who is struggling with debt to seek help as soon as possible.

Chief executive Campbell Robb said: "These shocking findings show the extent to which millions of households across the country are desperately struggling to keep their home ... Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable."

In December 2011, insolvency firm R3 found that more people than ever were expected to turn to payday loans to cover the cost of Christmas.

It said around two million people have now applied for this form of short-term credit, with 45 per cent of its survey's respondents now struggling to make their payslip last from month to month.

However, with interest rates of up to 4,000 per cent, payday loans can result in more debt unless they are paid off promptly.

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