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22 Jan, 2008

Leah Milner
Date: 22-Jan-2008 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, 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 unsecured."

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 date.

"I would therefore advise clients to raise the question with their mortgage broker or potential mortgage lender at an early stage."

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