22 Jan, 2008
Moneynet.co.uk has warned that a clause in
many mortgage contracts could put borrowers' homes at risk if they
default on additional borrowing.
If the mortgage has a clause called an "all monies charge", which
means that all debts including overdrafts and personal loans are
secured against a borrower's home.
This means that the mortgage lender is entitled to repossess if
the borrower defaults on any of this debt.
Richard Brown, chief executive of Moneynet.co.uk, says: "It's
shocking that borrowers who believe their additional borrowing is
safely separated from their mortgage are actually agreeing to risk
the security of their home."
He adds: "People may think better the devil they know when deciding
which lender to choose for an unsecured loan - but unless they read
all the small print they could be unaware that they are to all
intents and purposes signing up for a secured loan rather than
Mark Beaton, partner and head of residential conveyancing at law
firm Ashton Graham, says: "This issue is not always
investigated by a borrower and can come as a surprise at a later
"I would therefore advise clients to raise the question with their
mortgage broker or potential mortgage lender at an early