Friday 21st of August 2009
Individuals should avoid falling into a debt management trap by assuming that the current interest rate of 0.5 per cent means that they owe less money, it has been revealed.
According to David Kuo, director of fool.co.uk, many people on tracker mortgages will have taken advantage of the low rate and paid a smaller monthly repayment.
However, this could lead homeowners into debt management problems further down the line and they should instead have carried on paying back their mortgage at normal levels, a step he called "prudent".
Mr Kuo advised Britons to "keep paying what you have always been paying on your debts and mortgages because when the interest rate does eventually go back up it will hit you like a rock".
Homeowners who will not be enjoying a 0.5 per cent interest rate on their unsecured debt may want to prepare now for their mortgage repayments going up. One way to do this could be through a debt management plan.
By reducing interest on unsecured debt and potentially freeing up some spare cash, individuals may find that a debt management plan allows them to step up their mortgage repayments so when the interest rate does rise, they are more prepared.
By Neil Burton
