Posted: Tue Jan 22, 2008 3:03 pm
Moneynet.co.uk has warned that a clause in many mortgage contracts could put borrowers’ homes at risk if they default on additional borrowing.
If the mortgage has a clause called an “all monies charge”, which means that all debts including overdrafts and personal loans are secured against a borrower’s home.
This means that the mortgage lender is entitled to repossess if the borrower defaults on any of this debt.
Richard Brown, chief executive of Moneynet.co.uk, says: “It’s shocking that borrowers who believe their additional borrowing is safely separated from their mortgage are actually agreeing to risk the security of their home.”
He adds: “People may think better the devil they know when deciding which lender to choose for an unsecured loan – but unless they read all the small print they could be unaware that they are to all intents and purposes signing up for a secured loan rather than unsecured.”
Mark Beaton, partner and head of residential conveyancing at law firm Ashton Graham, says: "This issue is not always investigated by a borrower and can come as a surprise at a later date.
“I would therefore advise clients to raise the question with their mortgage broker or potential mortgage lender at an early stage.”
Andy Davie
IVA.co.uk Spokesperson and Website Manager
About me:
http://www.iva.co.uk/andy_davie_profile.asp
IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp
If the mortgage has a clause called an “all monies charge”, which means that all debts including overdrafts and personal loans are secured against a borrower’s home.
This means that the mortgage lender is entitled to repossess if the borrower defaults on any of this debt.
Richard Brown, chief executive of Moneynet.co.uk, says: “It’s shocking that borrowers who believe their additional borrowing is safely separated from their mortgage are actually agreeing to risk the security of their home.”
He adds: “People may think better the devil they know when deciding which lender to choose for an unsecured loan – but unless they read all the small print they could be unaware that they are to all intents and purposes signing up for a secured loan rather than unsecured.”
Mark Beaton, partner and head of residential conveyancing at law firm Ashton Graham, says: "This issue is not always investigated by a borrower and can come as a surprise at a later date.
“I would therefore advise clients to raise the question with their mortgage broker or potential mortgage lender at an early stage.”
Andy Davie
IVA.co.uk Spokesperson and Website Manager
About me:
http://www.iva.co.uk/andy_davie_profile.asp
IVA Helpline: 0800 197 4838
http://www.iva.co.uk/iva_helpline.asp