The Debt Test: Are You Making Out a Mountain Out of Your Mortgage?

According to the Council of Mortgage Lenders, first-time buyers are the most susceptible group of homeowners to debt, as they are more likely to have higher loan-to-value ratios and commit a higher proportion of their income to mortgage repayments. Despite their susceptibility to debt, there is evidence which indicates that insurance take-up and employee benefits provide recent first-time buyers with a safer foundation than the general population of mortgage borrowers.

The Council of Mortgage Lenders (CML) has become increasingly concerned about the ability of current and future home-buyers to pay back mortgages in the event of changing circumstances. Over the past five years, the CML and its partners within the Sustainable Home-ownership Initiative, have sought to improve this issue. Contributing factors to the problem include increasing personal debt levels and a less certain economic environment. This has provoked concern about the sustainability of home-ownership and consumer understanding of financial products, ensuring that the issue of mortgage risk is at the top of the agenda for the UK Government, industry regulators and public as a whole.

Over the last year, the Sustainable Home-ownership Initiative has debated the most effective move forward to increase home-buyers' awareness of potential debt and protection from unforeseen events with insurance products, specifically Mortgage Payment Protection Insurance (MPPI). The Financial Service Authority is leading the way to help raise awareness of debt prevention with the "Debt Test" initiative.

According to research carried out by the Council of Mortgage Lenders, two thirds of recent first-time buyers say that an online debt test designed to help them assess potential triggers of debt and highlight future borrowing risk would be useful.

The mortgage market is also watched very closely by the consumer research website, moneynet. In addition to tracking market behaviour, property values and homeowner incomes, moneynet have endeavoured to become increasingly proactive about educating their visitors, so they fully understand the complexity of the relevant financial products. In addition to their mortgage comparison service and mortgage protection options, moneynet published a comprehensive mortgage guide earlier this year, as part of its series of consumer product guides. Moneynet isn't the only site to offer enhanced information services; Which? also offers a detailed mortgage guide and mortgage search tool powered by Moneyfacts. Both "Switch with Which?" and moneynet take the consumer through the types of deal available, detailing the different interest rate structures including fixed rates, capped rates, discounted rates, stepped rates and standard variable rates.

The CML state that there is much evidence to show that first-time buyers appreciate this information, including the "debt test", more so than older households. This is perhaps due to the fact that many first-time buyers have to borrow much more for their initial property, due to high prices, and that they have generated more personal debt than their parents' generation. Whilst personal debt remains a major concern for the finance industry, the government and the public, financial stability remains possible with education.

* * * * * * * * * * * *

Resources:

http://www.moneynet.co.uk/mortgage-guide /index.shtml

http://www.switchwithwhich.co.uk/mortgage/index.html

http://www.cml.org .uk/

Rachel writes for the personal finance blog Cashzilla:

http://www.cashzilla.co.uk/

In The News:


pen paper and inkwell


cat break through


What You Dont Know About The Real Estate Process, Some Inside Secrets

Some people in the real estate industry have a terrible... Read More

Refinancing Your Mortgage Can Open Up A Lot Of Options For You And Your Family

It can happen to anyone, the roof is leaking, the... Read More

A Simple Way to Save Thousands on Your Mortgage Charges

How many times do you check you restaurant bill? If... Read More

Refinancing After Bankruptcy

Refinancing after a bankruptcy can seem like an especially difficult... Read More

Online Mortgages in 5 Easy Steps!

We're all entitled to the opportunities and benefits of home... Read More

Guide to Remortgages

Here is a useful guide to remortgages. What is a... Read More

Secured Lending - a Guide to Releasing the Value in Your Home

The recent boom in house price values have made some... Read More

The Mortgage Loan Application Online - Save Time & Money By Applying On The Internet

"You can save time and money by applying for a... Read More

Home Equity Loan ? With a Reverse Mortgage, Your Home Pays You!

The home equity loan has become quite popular in the... Read More

How to Avoid Paying Mortgage Insurance

In today's world, a borrower should not be paying mortgage... Read More

Council Right to Buy Mortgage ? Helping Everyone Have a Home of

"We will help every Council Tenant to become Home Owners"... Read More

Reverse Mortgage ? Be Sure You Need It Before Applying For One

Reverse mortgages used to be considered the last resort of... Read More

Home Mortgage Refinancing ? What?s in Your Contract?

Are you one of the millions of Americans who will... Read More

Bad Credit Home Financing - Buy a House Even With Poor Credit

Sub prime lenders come in two groups: reasonable and unreasonable.... Read More

FHA Mortgage: Whats the Best Way to Show an Underwriter that Youre Ready to Buy a House?

Mortgage underwriters can be a suspicious bunch. If you have... Read More

This Secret Weapon Will Eanble You To Close Up To 200% more Home Remodel Sales

Many Homeowners are not aware of all the options that... Read More

What Are Mortgage Brokers And Why To Use One

"Mortgage" is formed from two words: the French word "mort"... Read More

How To Determine The Price Of Your Home

Why is it that some homes sit on the market... Read More

Home Equity Loan or Home Equity Line of Credit ? Which is right for you?

The most common type of home equity loan is the... Read More

Tips for Getting Home Loans from the Right Lenders

Getting home loans is possibly the biggest step in an... Read More

Be Prepared when Seeking a Mortgage

When you're looking for a mortgage, whether it's a first... Read More

Mortgage Reduction Solutions

USA ECONOMIC CONDITIONSToday's sluggish economy has left millions of people... Read More

Good FICO Credit Score? Tips to Getting the Most Out of Your Home Mortgage Loan With Good Credit

Sometimes so much is talked about how to solve the... Read More

Home Mortgage Loans For People With Bad Credit - 3 Ways To Improve Your Chances For Getting Approved

Finding home mortgage loans are a reality for people with... Read More

Home Mortgage Quotes Online - How Do They Compare To a Quote From a Broker in The Real World?

Online home mortgage quotes are very similar to the quotes... Read More

Refinance Mortgage Rate and Mortgage Rates

Refinance mortgage rate is the best rate available to qualified... Read More

Look For a Great Mortgage Online

People who are looking for a mortgage today have many... Read More

What is a Fixed Rate Mortgage?

As the term implies, with a fixed rate mortgage the... Read More

Mortgage Loan Information - Know The Basics When You Refinance or Purchase a Home

If you are currently looking for a new home, chances... Read More

What is the PayOption ARM?

Imagine an adjustable rate mortgage that allows you to pick... Read More

Understanding Mortgage Points

When a mortgage broker asks a borrower to pay points,... Read More

Mortgage ? What, Why, When, and How?

What is a mortgage? Here's what The New Merriam ?... Read More

Money Smart Homeowners Use this Mortgage Strategy Every Time

There are currently more than 50 million home mortgages in... Read More