Homeowners could be at risk of getting into serious debt by over-committing themselves with loans and other forms of credit, say national charity Citizens Advice. A new survey - released for this year's Advice Week - shows that some 770,000 people throughout Great Britain with a mortgage have missed one or more mortgage payments in the last twelve months. The national charity is warning people to think carefully before taking on additional borrowing, particularly if they already have a mortgage and is pressing mortgage and secured loan lenders to ensure people can afford their repayments.
The survey showed that younger people are more likely to have missed a mortgage payment, with 13% of 21-24 year-olds surveyed said they had missed one or more mortgage payments in the last twelve months. This suggests that some people who are new to homeownership may be getting straight into difficulties. In 2005/6 local Citizens Advice Bureaux dealt with over 51,000 enquiries about mortgage and secured loan arrears and over 87,000 enquiries about actual or threatened homelessness.
David Harker, Chief Executive of Citizens Advice said: "These figures do not surprise us. Local Citizens Advice Bureaux helped people to deal with 1.25 million debt problems last year and see many people with mortgage and rent arrears. We are very concerned about the numbers of people who are missing payments. 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."
The survey also found that many people do aspire to home ownership, but may not be in a position to afford to own their own home. 19% of people who rent, around 2.6 million people, say they would like to own their own home but don't anticipate ever being able to afford it. An additional 42% of people who rent, around 5.5 million people, said they would like to own their own home but cannot currently afford, although they hope to be able to in the future.
David Harker added: "If people are considering becoming homeowners they need to understand clearly what they are taking on. We don't want people to borrow far more than they can afford. There is also a big responsibility on lenders of both mortgages and secured loans to take into account a person's full financial commitments, and ensure that customers can afford repayments on any additional lending."
The survey also found that some people don't understand what secured lending is and that missing payments on these loans could lead to them losing their home. 11% of survey respondents thought a secured loan was a loan where the borrower 'can miss payments and their home will always be safe', with a further 10% of people thinking it was a loan 'where the borrower can choose to pay back as much or as little as they like each month'. There is also concern about the way secured loans are marketed in newspapers, radio and TV adverts.
