2 Million Householders Admit to Paying the Mortgage by Credit Card

Housing charity Shelter has disclosed that over 2 million desperate UK householders have resorted to paying their mortgage or rent with a credit card.  A Shelter survey, conducted in August 2010, revealed that 6% of UK households had used plastic cards to meet housing costs and keep a roof over their heads.

Working class people are the most likely to use their plastic cards in this way, but 4% of ABC1s also admitted resorting to a credit card to pay their mortgage.

With more and more people facing redundancy and unemployment, the recent VAT increase and steadily rising prices, the charity has warned that many people will be starting the New Year with the threat of eviction or repossession hanging over their heads like the Sword of Damocles.

Sometimes just a small thing, like a bout of illness, rent increase or drop in income, is enough to nudge a family into a vicious downwards spiral of debt and arrears.  Consumer champion Martin Lewis of the MoneysavingExpert website advises householders to resist the temptation to pay housing costs with their plastic:-
 ‘If you’re doing it because you can’t afford to pay your housing costs, lumping up the borrowing is never the answer – far better to seek help as soon as possible and start managing the problem.’

In 2010 repossessions were lower than predicted, probably due to interest rate cuts and government-funded help for struggling householders. The Council of Mortgage Lenders (CML) has predicted that repossessions will increase by more than 11% in 2011, however, to a total of around 40,000, and that the number of UK mortgage arrears will grow from 175,000 to 180,000. 

The government’s decision to scrap its mortgage support schemes as part of its current round of swingeing spending cuts is partly responsible for the increases, according to the CML.  Since the Credit Crunch it is more expensive to borrow money, mortgages are hard to come by, and finding an affordable mortgage deal is likely to become even harder in the future.

The spectre of homelessness can only be staved off for so long by the use of expensive credit such as credit cards, which are now at a 13-year interest rate high. Campbell Robb, Chief Executive of Shelter warns that those experiencing financial difficulties should seek out expert help on how to keep their home as a matter of urgency:

“Shelter has a network of advice services across the country offering free advice on a range of subjects including debt and housing issues so we would urge anyone struggling to get in touch today. The sooner they seek help, the more options are available."