Mar 22 2005
An insolvency specialist has called for curbs on self-certified mortgages which allow home buyers to take out mortgages far bigger than they can afford to repay.

Nearly a third of home loans are now given out without borrowers having to provide proof of earnings. But Bev Budsworth, principal of The Debt Advisor, says unchecked lending is helping to push up property prices and consumer debt levels, leading to misery for thousands of families.

Bev, whose company helps people find solutions to debt problems, says that many of her clients ran into difficulties after taking out a self-certified mortgage. “As house prices rise, people become desperate to get on to the property ladder and are tempted to lie about their income and take out a bigger mortgage than they can afford.

“Mortgage repayments should never exceed 30 per cent of your income but for many of these people it’s 40 per cent or more. As they struggle to keep up repayments, they start to rely on credit cards for day to day spending and so a spiral of debt begins. By the time they come to see us they are on the verge of bankruptcy.”

Bev says that the government should look again at the issue of self-certified mortgages if it is serious about tackling rising house prices and growing consumer debt.

“At one time people were restricted to lending two or three times their income. Now the banks will lend much higher multiples. However market economics dictates that the more money that goes into the property market, the higher prices become. Non-verified lending is helping to fuel property inflation and create rising debt levels at the same time, leading to stress and misery for many homebuyers.”

The Debt Advisor is licensed by the Insolvency Practitioners Association to offer skilled and specialist advice on personal debt. Formed in 1999, the Debt Advisor works closely with those in debt to find solutions which can protect assets from creditors, freeze interest and charges to repay debt in five years or less. At its website - www.thedebtadvisor.co.uk - there is a live internet response which can offer immediate advice on debt problems.