Homes at risk as debt rises
Wednesday, 13 September 2006 12:00
Britons are placing their homes at risk by over-extending themselves with loans and other forms of credit.
New figures from Citizens Advice show 770,000 UK residents have missed one or more mortgage payments in the last year.
"We are very concerned about the numbers of people who are missing payments," said Citizens Advice chief executive David Harker.
"Missing payments on mortgages or secured loans could lead to arrears and possibly repossession.
"There is a clear need for more information and advice about the consequences of taking on financial commitments, particularly for younger adults."
Younger people are more likely to miss a mortgage payment, with more than one in eight 21 to 24-year-olds surveyed missing one or more mortgage payments in the last twelve months.
And many Britons are not aware of the risk they run by missing payments.
Citizens Advice figures show one person in nine (11 per cent) thinks a secured loan is a loan where the borrower "can miss payments and their home will always be safe". Another ten per cent of Britons think secured loans are "where the borrower can choose to pay back as much or as little as they like each month".
But despite the financial risk, millions of Britons are looking to climb onto the property ladder.
Some 2.6 million people who rent would like to buy a home, but do not think they will ever be able to afford one.
Another 5.5 million renting Britons would like to own and while they cannot currently afford to buy a property, hope to be able to in the future.
Citizens Advice produced the following tips for people struggling to meet mortgage payments or to afford a first home.
Tips if you have difficulties paying your mortgage
- Let your mortgage lender know straight away.
- Don't try and borrow your way out of debt, as it could get worse.
- Don't just stop or miss payments as you could lose your home.
- Don't ignore letters, especially court papers and court hearings.
Tips for Brits thinking of borrowing
- Spend time shopping around to see what's on offer.
- Always look at the total amount you will have to repay.
- Make sure you know the difference between secured and unsecured lending.
- Don't borrow more money to pay off existing debts.
- When taking out a mortgage with variable interest, ask what your monthly payment will be if the rate goes up. A fixed interest rate may make more sense for you.
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