First-time homebuyers in the UK should be properly educated about mortgages and that “they should be sold like driving licences, after study and an exam,” according to a national debt charity.
During the Consumer Credit Counselling Service (CCCS) Annual Convention, CCCS Chairman Malcolm Hurlston called the attention of the Financial Services Authority to issue home ownership certificates to people looking to acquire a mortgage when purchasing their first home.
“First-time mortgages should be sold not with pretty ribbons and tax breaks but with health warnings,” said Mr. Hurlston. “Home ownership is a lifestyle choice but a trap for many.”
"The people most likely to get into debt in Britain are those on low incomes who have wrongly or too soon embarked on home ownership," he added.
In the US, a federal mortgage programme is being implemented for those in a low income household. They can receive free or low-cost advice about buying a home, as well as issues regarding credit, default, renting and repossession.
According to the CCCS, about 1.7 million individuals and families in the US received housing counselling and education in 2007.
Mr. Hurlston describes the 100 percent plus mortgage products, which were available prior to the credit crunch, as “dangerous madness”. These kinds of loans were criticised after the credit crunch, and have now been withdrawn from the market.
Additionally, these types of loans were available at the height of the property boom and home borrowers were immediately placed in negative equity once house prices began their descent.