Saturday, May 06, 2006

I'll have a huge loan that I can't afford please Carol!

BBC News: Loan company lends into negative equity

Concern is growing that celebrity-led advertisements are leading borrowers to put their homes at risk, BBC ONE's Real Story has uncovered. In one featured case loan company FIRSTPLUS, promoted by Carol Vorderman, lent Emma and Kris Galloway more than the equity of their property.

Posted by SSM @ 12:47 PM (628 views)
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1. Bidin'matime said...

Somehow this comment didnt get blogged before, so I shall add it again, as it was orginally intended for this article:-

There is much evidence to show that people are consolidating their loans, which would be fine if they didnt just go out and borrow it all again. The simple fact is that most people budget for so much a month of outlay and borrow up to that. Therefore, having consolidated at a lower monthly payment level, they simply borrow more.

There is a maxim in business that says never borrow long to finance short this means, for example, if you buy something that will last 1 year, dont put it on a 5 year loan because when you need to buy the next one you will still be paying for the old one and even more the next year and so on until eventually you go bust. Well, this is exactly the mistake that so many people are making they cant afford a holiday, so they put in on the credit card, which they then add to their mortgage. Next year they put in on the credit card again and, hey presto, the house has gone up in value and they increase the mortgage again to consolidate their debts. Only now, they have to pay for more on their credit card, because they cant really afford the mortgage payments, so they are buying food and other essentials on the card. But never mind, the house has gone up in value again, so up goes the mortgage (self-certified, of course) and off we go again. Until the market staggers to a halt and / or interest rates rise then give them a matter of months, before they too will be knocking on the Official Receivers door asking to be relieved of all this unfair debt that people have wickedly lumbered them with

Saturday, May 6, 2006 06:54PM Report Comment
 

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