Homeowners have risked repossession of their homes by taking out loans secured against their property
Rising interest rates and large credit card Debts are driving increasing numbers of consumers to take out home loans that put their homes at risk.
Five interest rates rises over the past year, will leave many people unable to meet monthly repayments on credit cards, personal loans and car finance deals and there mortgage payments, economists predict.
the debt crisis is driving people into the hands of highly controversial debt consolidation companies and dubious money lenders.
The market is seeing a surge in second-charge mortgages which, could lead to rising repossessions for many years to come.
These products, the most common type of "second charge mortgage", are heavily advertised on day-time TV and are being heavily sold to the “sub – prime market “
Debt consolidation companies offer to pay off a consumer's credit card bills and other types of unsecured According to the Bank of England, consumers have racked up more than £1.3 trillion of unsecured lending.
The Bank of England voted to raise base rates to 5.75 per cent last week - the fifth increase since July last year.
We expect rates will rise to 6 per cent. Even though it takes between six months and two years for the full effect of a rise to be felt, repossessions have already increased sharply. Three times as many properties have been repossessed in the second half of last year than in the first half of 2005
According to the Consumer Credit Counselling Service charity, debt consolidation loans only benefit a minority. In an analysis of thousands of people who had taken out these loans, it said 97 per cent would have been better off by taking alternative action.
Steve Jenkins 29, lives with hiswife and two children in Nottingham. The couple took out a £19,000 loan plus an extra £5,000 loan insurance policy in july 2005 to pay back over 10 years.
If they are unable to keep up these repayments they may have their house repossessed.
Tip: Always better to remortgage than take out a loan from one of the companies that advertise on daytime t.v.
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I think with bad credit, you can’t afford not to refinance a high interest mortgage. Working with the right lender, you can trim your loan costs and help your monthly budget. You even have the option to cash out part or all of your equity to pay off high interest credit card debt. Subprime lenders can help you secure financing and reestablish your credit.
But anyway bad credit mortgage lender helps those who have a bad credit score or low income. They can also help get your loan approved faster than other programs. Although getting a bad credit loan may be easy, a bad credit mortgage loan has its price – you will likely pay higher interest rates and higher closing fees.
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