Latest Debt News
Homeowners warned against extending mortgage
15/07/2008 16:56:00
Homeowners are being warned against extending the life of their mortgage when renewing it, as it can add thousands to the amount owed.
Around ten to 15 per cent of households are choosing to extend the life of their mortgage when drawing more money against their home, a practice which John Charcol advises against.
The mortgage broker states a loan of £155,000 at a rate of six per cent would increase by £35,000 if extended by five years.
Ray Boulger, senior technical expert at the firm, said: "The key thing is that a homeowner who needs to remortgage must feel they can afford the higher payments."
Francis Ghiloni, business development director of Mform.co.uk, said the practice is still better than doing nothing about the debt situation.
He added that "the way to end up getting repossessed or being forced to sell your house and trade down" is by doing nothing.
Fool.co.uk has recently criticised another scheme aimed at people who are struggling with their mortgage debts.
The money advice site said sale and rent back-products are used as a fast fix, but people do not fully understand what they are signing up to.
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