Debt loans may risk your home
Individuals struggling with loans and other unsecured debts are being pushed into secured debt consolidation loans without realising their homes could be at risk.
A number of specialist brokers and lenders are talking people into securing a loan against their property or extending mortgage terms as a means to consolidate unsecured debt. A new report conducted by two leading debt charities claim that lenders are aware that some customers are unable to meet the terms of such agreements, and are authorising them regardless.
A secured loan can be an effective way to control debts providing the customer ceases to acquire new forms of credit. The report suggests that the majority of people agreeing to consolidate their unsecured debts using this method, continue to acquire credit. As a result, many are putting their homes at risk by chancing repossession.
If a person continuously fails to meet payments for an unsecured loan, a lender will usually advise they seek professional debt help such as an IVA or debt management plan. It is very rare for a lender to call for bankruptcy. If the customer has a secured loan and they miss payments a lender will action a CCJ against the customer. If the CCJ is ineffective, a lender will then add a charge to the property allowing them to claim back the loan, once the home is sold.
There has been a sharp rise in the number of CCJ’s issued last year. The reason for the increase is said to be due to lenders limiting their bad debts by adding a claim to a person’s property. CCJ’s are an important part of any lenders operations and the increase suggests a change in trend by creditors.
Lenders are securing stakes in a person’s property as an essential step to claiming a proportion of available equity against the debt. If you are considering a secured loan as a means to control your debt, you must ensure you are comfortable with the repayments and that it will have a positive effect on your debt situation.
