A report was published yesterday by Shelter, the housing and homeless charity, that should worry a lot of people. The report was based on a survey of householders and carried out on their behalf by Yougov.com. The results suggest that a large proportion of the population are using, or have used, their credit cards to help them pay their mortgage or rent at sometime within the last twelve months.

Something like one in sixteen households have apparently used a credit card to help them pay their mortgage or rent and if this is the case, it suggests that things are not quite as rosy in the economy as some would like to suggest.

This comes at a time of historically low interest rates and, we are told, many people are taking advantage of the situation to pay down their credit and debt. It should also be pointed out that credit card interest rates are at a historic high when compared to the bank rate. Overall personal debt levels are apparently reducing and many people find themselves paying hundreds of pounds less each month on their mortgages than they were two years ago. This has enabled them to take the prudent step of reducing other debts using the extra money they have available each month.

The biggest problem would seem to be with the many struggling working families who may have lower incomes following redundancy as a result of the recession though it is not entirely restricted to those on lower incomes.

It is all too easy to imagine a scenario where using your credit card to pay your mortgage appears, at first sight, a sensible move. If you had been recently made redundant and had trouble paying the mortgage but you felt confident you would soon get a job, the logic of paying this months mortgage payment with a credit card may seem reasonable but it is a high risk strategy. The serious problems would develop later if you had not been able to find a job or increase your income.

Credit cards are very useful financial tools to use for short term credit but, and it is a big but, they are very bad to use for long term credit and if you cannot be sure you will have the money to repay the debt soon, the debt will just grow and grow.

It is not too hard to build up credit card debts where the monthly repayments are greater than your mortgage or rent if you spend regularly on your credit card while paying the minimum repayments each month.. This may be surprising to many but it can happen all too easily if you have a spending frame of mind and available credit. This is after all what we have been encouraged to do for years by every advertiser and credit card company.

Given a good credit rating and a lot of credit cards you may feel that using the credit cards to fund the mortgage repayments will get you over a temporary financial problem and that is possible if you are confident your financial circumstances will change for the better very soon. The result of doing this is that you are paying two lots of interest on the original debt and digging yourself an even bigger financial hole to get out of later.

There are warning signs when you are using your credit cards a lot.

1. If you find yourself using one credit card to make payments on another you should start to worry.
2. If you are paying less than the minimum payment on a different card each month to lessen the default problems, you should worry.
3. If the overall balance on your credit cards is increasing month after month, you should worry.
4. If you are paying your mortgage with a credit card you should definitely be worried.

Unless you have some cunning plan and are very financially astute as this is basically gambling that things will get better soon. If you find yourself in these types of financial difficulties you should discus your financial situation with one of the debt support organisations who will be happy to offer advice on the best ways of dealing with the problems.

They may be able to suggest alternative approaches to managing your financial difficulties that are less expensive and are more likely to enable you to stay in your home. Almost certainly credit cards are not the answer to paying your mortgage.

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They obviously have their own points to make but it is an interesting explanation of how the mortgage market works and you can read it here… <click here>

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After months of falls in the value of property nobody knows how much further that might continue and if most people think that it will, they might be unwilling to commit to buy right now. There is the additional problem that with the economy balanced so precariously people are concerned about their prospects for the future and the possibility of suddenly finding themselves unemployed and their income reduced.

The Northern Rock mortgages will help improve availability of mortgages and it may signal a start to turning things around. There are many people who do feel secure in their jobs and will be ready to buy houses and it may be that we are nearing the bottom of the slump and it could be a good time to be buying but there are many questions and few answers right now.

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“dubious advice from brokers, irresponsible lending decisions and aggressive arrears management by sub-prime lenders are driving the current increase in mortgage arrears” according to the report

I have long felt that all of the banks and mortgage lenders are rather too quick to jump on their borrowers in the event of late and defaulting payments. They all claim to help and support their borrowers when they are having difficulty paying their debts but the reality seems to be that they have little interest in working with their customers to overcome those difficulties. Some time ago I wrote about a series of articles on the BBC.co.uk website which was a diary of a lady who was attempting to get through a difficult financial period due to her having lost her employment, temporarily, through having a baby. The Banks were unsympathetic and very unhelpful even though she had every prospect of being able to pay all her outstanding debts in a matter of a few months.

It seems crazy that banks would not work with customers to get full repayment of their debts. It surely makes sense to work with the customer rather than doing their best to bankrupt the customer and end up with a settlement that is less than what could have been achieved by assisting their customers.

Their are legions of successful people who have rebuilt their lives after financial disaster. I have no doubt that when it comes to investing those millions they make they do remember which banks and creditors tried to help them when things were tough. We should all do that and avoid using banks and other lenders who when it comes to difficult times are unhelpful. None of us know when we might suddenly find ourselves in financial difficulty. The most common reasons are divorce, redundancy and ill health. None of those are by choice, nobody wants to suffer financial hardship but if we do we can reasonably ask that the bank that was so keen to lend us money when things were going well should be supportive and help us when we really need lenders to be understanding. It is in their interests as much as ours. Sadly as we have seen in the whole credit crunch debacle. Banks, in general, are run by a bunch of greedy, self-centred  mega-bonus seeking idiots who cannot even work out simple sums on a calculator that a child would find simple to do.

Banks that genuinly want to work with their customers through the difficult times and not just through the easy times will have the opportunity to develop a lifetime customer and that seems to be in their interests. It seems odd that none of them seem to care about this.

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