- 05
- Jul
Many new homeowners are not aware of the risks of 30 and 40 year mortgages. They are not calculating the dangers of carrying their mortgages into retirement.
The ForeclosureDeals website states: “If a homeowner can’t make his or her monthly mortgage payments…he or she is usually in forced into the position of defaulting on the mortgage, and then the lender must foreclose on the home. After repossession, the lender is the new owner [and] the property is known as a repo home, property repossession, real estate owned property (REO), bank-owned property, foreclosure home, government home, distressed property, repossessed home [or] commercial seized property.
“Whatever name the properties have, they all have one thing in common – the new owners want to sell them as quickly as possible, often even if that means selling the repo homes at a price well below their full market value.”
Julia Harris, analysts at Moneyfacts.co.uk, said that consumers needed to take into consideration the size and repayment terms of a mortgage.
Harris said: “A mortgage for most of us will represent the largest and longest financial commitment of our lives. For many years the standard term considered for a mortgage in the UK was 25 years, but as affordability becomes increasingly difficult for many of today’s first time buyers, a 25-year term is perhaps no longer considered sufficient.”
Added to this debt is any number of secured loans taken out over the years by homeowners looking to release equity. Wether for home improvements or a holiday, homeowner loans increase the overall burden of debt faced by families.
“It’s a frightening thought to think you could potentially be forking out for that hefty monthly mortgage payment from the moment you turn 18 until the day you retire at 70,” continues Harris.
