| Self-certified mortgages plunging consumers into heavy debt |
|
|
Ms Bev Budsworth of the Debt Advisor notified today that a considerable number of consumers were getting themselves into ‘debt trouble’ by opting for a ‘self-certified’ mortgage.
As the name suggests, self-certification mortgages certify buyers to procure heavy mortgages; in many cases, borrowing is so heavy that they just cannot afford to repay. What’s more, about a third of these mortgages have been found to be issued without the borrower having to furnish the lender with any documents stating his income or proving his earnings.
Such unbridled lending practices are being seen as the precursors of increasing brick and mortar prices as well as rising consumer debts. According to Ms Budsworth, most of her clients were facing repayment problems after opting for a self-certified mortgage.
She went on to explain that a hike in property prices saw consumers becoming increasingly anxious and thereafter resorting to lies about their earnings. This compelled them further to borrow amounts that were far beyond their repaying capacities.
She also added that mortgage repayments ought to be within 30% of one’s income but unfortunately, most people in UK had their repayments exceeding 40% of their incomes or even more. Again, the tussle to make mortgage repayments further led customers to rampant credit card usage, thereby making a ‘spiral of debt’ begin.
Ultimately, consumers found themselves at a complete loss and at the threshold of bankruptcy.
All in all, it is absolutely essential to curb self-certified mortgages from becoming the order of the day. It is also important to look into other serious consequences of these unwarranted loans like house price hikes and escalating consumer debt which were extremely detrimental to the growth of the economy.
Posted
on : Mon, 28 Mar 2005 00:00 GMT | Mortgages News
By : Mark Richardson
|
| |
| Related |
|
|
|
