Tuesday 31st of March 2009
Many homeowners are taking advantage of low mortgage rates to pay off expensive debts, research has shown.
According to Unbiased.co.uk, 56 per cent of those with deals that track the Bank of England’s base rate are not using savings made by recent cuts to reduce mortgages.
But 38 per cent of these are diverting money in order to pay back credit cards and personal loans, a debt management tactic that could help avoid the need for IVA help.
However, the site noted that almost a third of those who are failing to overpay are buying luxuries or using the cash for everyday expenditure.
Spokesperson Richard Winder urged these consumers to consider maintaining mortgage payments in order to reduce the amount of time they are in debt, but added: "We’re encouraged by the large number who are using their repayment savings to erode their more costly credit card and personal loan debts."
Recent Land Registry figures showed that house values have fallen by 16.5 per cent over the last year, a situation that could leave homeowners facing negative equity and the need for IVA advice.
