That is correct, I have written about this in much earlier posts, some financial commentators state that individuals paying more than 35% of their after tax income on a mortgage loan could be deemed to be in financial stress. So an additional secondary loan could push some people to 40-50% of their income.
One wonders why these individuals don't apply to their bank for an extra loan top-up instead of the secondary market?
I have trawled through my own statistics of 1100 loans taken in the last 2 years. Here are some facts:
- 642/1100 loans were with a mortgage and only 2 of these have defaulted
- 348/1100 loans were to renters and a total of 5 defaults
- 33/1100 loans were owned no mortgage, supplied by employer and 0 defaults
- 77/1100 loans were living with parents, boarding and other, with a total of 9 defaults