- 05
- Sep
A recent report from Sky News warns against using your home as a cash machine. Mortgage equity withdrawal, homeowner loans and other loans secured on your home often allow people to borrow at preferential rates because the lenders have the security of your home. Secured loans are also favoured by people with poor credit ratings.
Homeowner loans may seem like a safe proposition, especially when property values keep rising, but the Sky News report warns that the trend to consolidate debts by taking out a homeowner loan could backfire if the property market declines. Instead, the report suggests that people curb their spending habits rather than using equity release to maintain unsustainable lifestyles.
However if the only other option is to maintain several credit cards by paying the minimum amount, a consolidation loan may help by reducing your monthly commitments.
