Negative equity ‘can create bad debt’
Negative equity can create a bad debt problem for first-time buyers, it has been warned.
Michael Brill, director of Baronworth Investment Services, urges first-time buyers to consider the possibility of a house price crash before taking on mortgages with loan-to-value ratios of up to 110 per cent.
However, he adds that if property values continue to rise, a mortgage could prove more affordable than paying rents in coming years.
Mr Brill urges those who find difficulty in meeting their repayments to contact their lender in order to reach an “amicable” solution.
“The first thing to do if one is getting into debt with mortgages is not to put your head in the sand,” he states.
“If you ignore it you can have problems like getting a bad credit rating.”
Those who are faced with bad debt due to negative equity or mortgage repayments could benefit from expert advice on managing their finances.
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