Many mortgagees 'in danger of defaulting if income falls'

A drop of £300 in income would cause one in four people to default on their mortgage payments, it has been reported.

Research conducted by Callcredit, which interviewed professionals in the 35-44 age group, found that one in eight respondents had deliberately over-inflated their income when applying for credit in order to help them secure a higher limit.

The study found that ten per cent of respondents have taken out a loan in the past knowing they may not be able to afford the repayments.

Commenting on the study, Helen Adams, managing director of FirstRungnow.com, said it is becoming more difficult for people to exaggerate their income when applying for a mortgage.

She stated: "As part of the mortgage advising process, you have to verify peoples' income so it is getting harder to inflate your income these days.

"With respect to first time buyers, they must ensure that when interest rates go up or the discount period comes to an end they still have the finances to be able to cover their mortgage payments."

According to the Council of Mortgage Lenders, gross mortgage lending declined from £13.4 billion to £9.1 billion between December 2009 and January 2010.

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2010-03-15 13:24:18 © Moneyextra.com