Mortgage trap claims fresh victims

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The Independent Online
For Karen Looij and her husband, Will, already suffering from negative equity, the latest interest rate rise pushes them further into an almost inescapable mortgage trap.

The Looijs bought their three-bedroomed semi-detached home in East Grinstead, West Sussex, for £72,500 in 1989 - taking out a £60,000 deferred interest mortgage. The backlog of interest payments had swelled their debt to £72,000 by last year, while the value of the house has shrunk to £68,000.

"Last year we changed to a repayment mortgage and cashed in our endowment policy to pay off a bit of the capital," Mrs Looij said.

"At the moment we're paying about £600 a month on a £72,00 mortgage. I'm worried about the new rises. We haven't heard yet how the last one will affect us."

She said that all the family's efforts were concentrated towards keeping up with the mortgage payments.

She has taken a new job as a legal secretary in London in order to supplement their income. Her husband, who lost his job as an aircraft engineer, has temporary work.

"All I do is work to pay the mortgage. We are absolutely having to cut back. We have no fun money whatsoever - it all goes on bills. Forget holidays. There's nothing left over," Mrs Looij said.

"I've given up worrying about the house. I'm fed up with it now. We can't even remortgage out of it now because of the negative equity.

"Sometimes I think about renting and just walking away from it. We could rent a beautiful house for £500 a month - that's £100 less than we're paying now. But then we'd never be able to get a mortgage again.

"I knew of someone last year who sold up in the end and moved into rented accommodation. But there's no point us selling because negative equity means we'd still owe them £10,000."

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