Borrowers 'funding mortgages with loans'
Homeowners are increasingly being forced to take out personal loans in order to pay their rising mortgage payments, according to a new report.
Research conducted by MoneySupermarket.com revealed that seven per cent of borrowers had taken out a personal loan and nine per cent were relying on their credit cards in order to meet spiralling mortgage repayments.
And with another £30 billion worth of mortgage deals coming to an end this month, many more people - particularly those who have bough property for sale in London - could have to resort to these methods.
Tim Moss, head of loans and debt at the price comparison website, expressed his dismay at the findings of the new study.
"Having a roof over your head has to be your top priority," he said. "But to be funding that with a loan you might default on - or with a credit card that will eventually charge you interest of over 15 per cent - is not the solution in the long term."
GE Money Home Lending attempted to raise optimism over the current property downturn this week, insisting that house prices would have to fall a further 20 per cent for the average homeowner to enter negative equity.
Published 5th July, 2008
© 2008 Estates IT Limited
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Homeowners are increasingly being forced to take out personal loans in order to pay their rising mortgage payments, according to a new report.