Individuals 'using credit to pay for home'

Posted: 04 Jan 2012 12:38:46 GMT

Many people are using payday loans to afford their mortgage repayments.

Many people in the UK are relying on credit in order to keep a roof over their heads, new research has shown.

Carried out by Shelter, the study revealed nearly one million individuals have taken out a payday loan to help pay their mortgage or afford their rent in the last 12 months.

It was also found that almost seven million UK adults are using credit in one form or another - such as credit cards, unauthorised loans and other agreements - to help boost their ability to keep up with housing costs.

As a result of this high level of lending, the homelessness charity is warning that the new year could see a significant increase in the number of people being forced onto the streets as they struggle to make their payments on time.

Campbell Robb, chief executive of the group, described the findings as shocking and claimed they underline the extent to which millions of individuals are finding the going tough at present.

Mr Robb stated: "Turning to short-term payday loans to help pay for the cost of housing is totally unsustainable. It can quickly lead to debts snowballing out of control and can lead to eviction or repossession and ultimately homelessness."

He explained someone in Britain faces the threat of losing their place of residence every two minutes, adding: "We urge every single one of these people now relying on credit to help pay their rent or mortgage to urgently seek advice."

Shelter explained anybody feeling the pressure when it comes to paying for their accommodation should make it their New Year's resolution to get help in order to sort the problem out.

The news comes after the Financial Times recently reported that mortgage rates are expected to increase considerably in the coming 12 months, despite chancellor of the exchequer George Osborne claiming low borrowing payments were beginning to prove advantageous for British families.

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