Shelter has reported that as more than a million UK homeowners use credit cards to pay mortgages or rent, with first-time buyers featuring prominently on the list of offenders.
Six percent of respondents to a YouGov survey who pay mortgages or rent said they had relied on a credit card to make payments, equating to a national figure of more than a million householders. Almost seven and a half per cent of people aged 18 and 24 saying they had done this in the last 12 months.
Shelter chief executive Adam Sampson described the results as shocking, and added: “The number of people hit by the credit crunch, interest rate hikes and unaffordable housing costs are rapidly rising. For many people trying to keep a roof over their head desperation is driving them to short-term, high-cost borrowing. Ordinary people are being forced to seek more risky and expensive ways to stave off the threat of eviction and repossession.”
Julia Harris, mortgage expert at Moneyfacts.co.uk commented on the worrying statistics: "Borrowing to pay your mortgage on your credit card is a dangerous trap. Take the example of an £130K mortgage over 25 years charged at 5.5 per cent. Putting just one months mortgage payment of £740 on an average credit card and making only the minimum payments to the card could see this debt stay with you for 19 years and 10 months, incurring a staggering £1359.97 in interest.
“Struggling to meet mortgage repayments is nothing to be embarrassed about, as often unforeseen events or expenses can stretch our incomes too far. Depending if it’s a short-term cash shortage or perhaps a longer term affordability issue, lenders will do their best to offer advice and financial support. It’s in both the borrowers' and the lenders' interests to make sure homeowners continue to meet their repayments."
