At the same time many people who were already in debt have found themselves even deeper in debt, having struggled to keep on top of their debt repayments and to keep on top of other financial commitments. This has left many households in a very difficult financial situation, and despite the fact that the recession is now officially over things are not set to improve any time soon.

In a recent report a financial industry expert, Chris Tapp from Credit Action, has stated that personal debt levels in the UK are set to remain high for the foreseeable future, as many people are still struggling with their finances and therefore do not have the resources to tackle their debts and make repayments on the money that they owe.

Although the credit crunch has resulted in a tightening of lending criteria amongst banks and other lenders, which means consumers are less likely to get finance and accrue debt, many are struggling to pay existing debts because of factors such as reduced working hours and job losses.

Mr Tapp also added that the increase that has been seen in unemployment levels could make debt problems worse, as consumers turn to sources of alternative funding such as credit cards and overdrafts in order to make ends meet.

Tapp stated: “I think we will still continue to see personal insolvencies very high for some time until employment begins to filter back into the system and more people can get back into jobs.”

Personal debt levels set to remain high is a post from: Glitec

A mortgage is a loan that is taken out to purchase a property, and this makes it a secured loan. When you take out a mortgage you are given a mortgage term over which you will be repaying the loan, and at the end of that term, in one way or another, the balance of the loan plus all interest owed to the lender should be paid off. This happens in different ways depending on whether you have a repayment (capital and interest) mortgage or an interest only mortgage.

Interest only mortgages were once very popular in the 1980s and 1990s, but these days are classed by many lenders as higher risk mortgages. As a result of this some lenders have now stopped offering interest only mortgages. As with repayment mortgages, when you take out an interest only mortgage you will make repayments over a certain period of time, which is the term of the mortgage. However, as the name of the mortgage suggests your repayments will be paying only the interest on the loan, which means that at the end of the mortgage term you need to find some other means by which to pay off the actual loan balance.

This means having some sort of sideline investment to run alongside your mortgage such as an endowment, ISA, or other vehicle through which to try and raise the money to pay your principal loan balance. This method puts you at risk of not being able to raise the amount of cash required to pay off your principal loan balance at the end of the term. The main benefit with interest only mortgages is that the monthly repayments can be significantly lower than with repayment mortgages. However, you will not see your actual loan balance go down over the mortgage term because none of your repayments are being put towards your principal balance.

With a repayment mortgage the monthly repayments are higher. However, this is a more straightforward mortgage that can offer increased peace of mind. Your monthly repayments are split between the interest and the actual principal loan, hence this type of mortgage is also known as a capital and interest mortgage. This means that you will be able to see your mortgage balance coming down over the term of the loan, and by the end of the loan term, providing you have kept up with repayments, your mortgage will be clear and the property will be yours

Related Articles:

• End Of The Road For 125% Mortgages
• Mortgages – some frequently asked questions
• Fixed Rate or Variable Rate Mortgage
• Is it time to remortgage?

Repayment and Interest Only Mortgages is a post from: Glitec