When fixed-rate mortgages come to an end and debt begins
For many folks, fixed-rate mortgages have provided a lifeline to keep debt at bay and secure a comfortable roof over their heads.
However, many fixed-rate mortgages will come to an end within the next eighteen months leaving many in severe debt and headed toward an IVA as they cope with a gush of repayments which could escalate by almost 60%.
Northern Rock and many other banks have tightened their belts when it comes to lending and are learning from the mistakes made by sub-prime lenders in America. As a result, those looking for an equally affordable payment plan to their dwindling fixed-rate mortgage could be in for a nasty shock.
Those in most danger will be people who have acquired a county court judgement as a result of unpaid debt or those who have acquired negative marks on their credit record for irregular repayments.
Many will be forced to switch to a standard variable rate mortgage which could be 2.5 percentage points higher than their current repayments. Others who have built up a poor credit history could see rates rise even higher.
In the past, a county court judgement was not considered a major factor. However, these days it could make the difference of being offered a sub-prime mortgage in comparison to a dependable fixed-rate. This will increase debt at the end of 2008 to a much higher level than ever before.
Debt Advice News posted on 13/11/2007 13:09:09
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