A survey for the homeless charity Shelter has revealed that in 2007, more than one million people in the UK have used a credit card to pay their mortgage.
It seems that young people, including first time buyers are so eager to remain on the property ladder that they have resorted to this drastic action. More that 7.5% of people aged 18-24 have admitted paying their mortgage with their credit card.
But if you think thats bad, it gets even worse.
It has been reported that some mortgage lenders are actually advising their customers who have repayment problems to take this course of action.
Debt Management - Credit Card Debt Consolidation, Debt Relief ::
your mortgage, utility bills, car payments, credit and using the equity in your home, you can climb out of the mountain of debt. Pay Off Credit Card
http://www.mortgageloan.com/debt-managementHOME |
Truly Shocking!
The interest rate on most credit cards is at least 50% higher than even the worst mortgage rates available in the sub-prime sector. And the repayment schedule for your credit card debt will be spread over a much shorter period of time.
So in effect youre swapping long-term, low-cost debt for short-term, high-cost debt.
Even if you use a credit card that provides 0% interest on purchases, the debt will still have to be repaid at some point in the future.
Okay, it might buy you a little time when you dont have to pay interest, but when the interest free period comes to an end, youll have to find another 0% deal, which might be almost impossible in the current economic climate. Credit card providers are clamping down on easy credit, special 0% interest rate deals are scarce and many lenders have implemented balance transfer fees.
Credit-card delinquencies hit record - Sep. 28, 2005::
101 Best Places to Live Calculators Mortgage Rates Personal tech Big Tech blog avoid using your credit cards until youve gotten a handle on your debt; and
http://money.cnn.com/2005/09/28/pf/debt/delinquenciesHOME |
And if you miss your credit card payment date just once, any special deals may be canceled and youll have to start paying a hefty rate of interest, in addition to your continuing mortgage repayments.
So wherever you live, if youre having problems making your monthly mortgage payments, dont follow such reckless and irresponsible advice. Once you cross this danagerous financial barrier, the countdown to repossession starts ticking.
If you find yourself struggling to repay your mortgage, there are several options worth exploring.
The first step it to talk to your lender and see if they can suggest any sensible solutions to help you overcome the problem. Dont let these reports about irresponsible lenders put you off contacting your mortgage provider. They may be able to offer you a solution that doesnt involve making your situation worse.
If your financial problems are only likely to be temporary, you may be able to arrange a payment holiday so that you dont have to make mortgage repayments for two or three months.
However, in many cases, this option will only be available if youve previously made overpayments. It also mean that the overall size of your mortgage debt will rise slightly.
Alternatively, you could shift the monthly payment date so that your mortgage payment is deducted from your bank account just after your salary has been paid in.
On the other hand, if your repayment problems are likely to exist for the foreseeable future, its important to consider other ways to reduce the size of your monthly repayments.
You could extend the term of your mortgage, repaying it over 27 or 28 years instead of 25, or you could switch from a repayment mortgage to an interest only mortgage until your financial problems pass.
However, both of these are major financial decisions that should only be taken after appropriate financial advice from a professionally qualified advisor.
As a last resort you could consider stepping off the property ladder temporarily. At the time of writing, the property markets in many countries are generally thought to be overvalued and this would allow you to find a more affordable home once the property markets return to sensible levels.
Whatever happens, dont default on any of your mortgage repayments as it will dent your credit rating and could lead to an increase in the rate of interest that you have to pay on your debts.
Just make sure that you find a safer solution than whipping out your credit card!
 Who do you all think McCain will have in his cabinet?
 I'm looking for a nice camera for high quality photography, under $300..?
|
Mortgage Debt - Avoid Using Your Credit Card