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/

---

Mortgage Clarksville - Find the Best Deal

Searching for a mortgage can sometimes be a hassle. Where... Read More

Getting the Best Homeowner Loan for Your Money

With so many lenders out there, it can be hard... Read More

Kingsland Saint Marys & Kings Bay Real Estate - VA Mortgage Information For Home Buyers

A VA guaranteed mortgage is the usually the best way... Read More

Shopping for a Mortgage, Avoid Three Common Mistakes

Buying a home or refinancing one is perhaps the largest... Read More

Life of an Escrow

Escrow is one of the last stages in the purchase... Read More

Should You Refinance Your Mortgage if Interest Rates Drop?

Mortgage refinancing is when you take a mortgage of a... Read More

Things that You Need to Know before Financing Your Home

Frequent Asking Questions:What are Points? A. There are several types... Read More

Change in Texas Law May Make Reverse Mortgages More Popular

Texas was one of the last states to allow homeowners... Read More

Bad Credit Home Loans - Dealing With Bad Credit Mortgage Companies Online

Dealing with mortgage companies online can enable you to get... Read More

Financing the Purchase of Foreclosed Homes

Homes that have been foreclosed can be one of the... Read More

First Time Buyer Home Loans - Things To Consider When Applying Online

As a first time home buyer, there are several things... Read More

Selecting the Right Mortgage for You

A mortgage is a loan you take out to buy... Read More

Home Equity Loan ? Not Just For Home Repairs, And Tax Deductible, Too!

Thanks to the combination of low interest rates and skyrocketing... Read More

Is the Inverse Mortgage a Scam? New Program Promises Mortgage Payoff inside of 5 Years

If a mortgage could be paid off in five years... Read More

Secured Homeowner Loans to Reiterate that a Home Provides More than a Roof Over Your Head

"The ache for home lives in all of us, the... Read More

Mortgage Research Good News for House Buyers

Figures from the Council of Mortgage Lenders show that in... Read More

What Exactly Is A Reverse Mortgage And How Does It Work?

A reverse mortgage is a certain loan that allows the... Read More

Seniors Can Use a Reverse Mortgage to Fund Annuities, Investments, and Insurance Policies

For many seniors in or entering retirement, the prospect of... Read More

Save Yourself from Homebuying Disasters

Whether you are a first time home buyer or a... Read More

A Guide to the Best Remortgage Deals

Finding the best remortgage deals isn't always easy, especially with... Read More

Low Home Mortgage Interest Rate - Finding the Best Mortgage Rate

Interest rates are at an all time low, making now... Read More

Hard Money Loans - Reasons Why You Might Want To Try Applying With A Subprime Mortgage Lender

Before you apply for a hard money loan, try applying... Read More

A Home Equity Loan - What You Should Know?

Asking yourself, "Is a home equity loan right for me?"... Read More

5 Ways to Use Your Home Equity Line of Credit

Your home is a source of pride and accomplishment. Did... Read More

Are You Ready for a Home Mortgage Loan?

Buying a Home and committing to a Mortgage can be... Read More

Home Equity Loan ? A Reverse Mortgage Could Provide a Comfortable Retirement!

While only comprising about 1% of all mortgages, the reverse... Read More

Fixed-To-Adjustable-Rate-Mortgage

What is a Fixed-To-Adjustable Rate Mortgage?This type of mortgage offers... Read More

Option One Mortgage Loans ? Getting an Option ARM or Option One Mortgage Loan

Have you heard about or been interested in finding out... Read More

Desperately Seeking Good Leads, The Adventure Driven Loan Officer

As loan officers, the word "lead" is by far one... Read More

Home Loans: What You Should Know!

Finding home loans can be a daunting task, whether you're... Read More

Refinancing Your Home Mortgage - Get Up To 125% Cash From Your Homes Value

With the low interest rates being offered by lenders today,... Read More

Think You Cant Get a Mortgage?

You've finally found that dream home that you have always... 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