The short term lending products can be particularly attractive to consumers with bad credit histories, as they provide funding quickly to aid cashflow problems.

Since the credit crunch, the CCCS says payday loan demand has increased, but can be one of the most expensive ways to borrow money.

Price comparison website uSwitch.com last month released research on payday loans demonstrating how a payday loan of 750 GBP can end up costing a borrower 1,687.50 GBP if they do not start making payments for five months.

Thanks to the collapse of confident lending between banks, it is now a struggle to obtain secured loans, and bad credit mortgages are perhaps the most difficult to find.

Mr Brown, however, claims that he called for an early warning system long before he became Prime Minister, which may have avoided the current financial crisis.

NatWest/RBS, Alliance & Leicester and Abbey all reduced the prices of their two-year fixed rate deals, although high loan-to-value ratios remained.

This may indicate the start of a slow return to stability, and a knock-on effect could be greater ease in securing bad credit mortgages.

This represents a change of plan for the struggling bank, which previously advised customers to try and switch to another bank.

Now, the bank can afford to keep its customers, allowing them to remortgage with Northern Rock rather than another lender.

This may ease the pressure on the remortgage market, making it easier for customers to find products such as bad credit mortgages.

The ads are designed to target younger people, who are more likely to have bad or no credit history.

Many boast that there is no credit check to stop people with bad credit receiving funds; but interest rates are often notoriously high.

Many people searching for loans, especially bad credit mortgages, are advised to consider any new loan carefully.

Max Sinclair of Property Week says in an editorial piece that lenders will not lower LTVs and the days of cheap and easy mortgages are over.

This spells bad news for anyone searching for bad credit mortgages, for whom the search is already difficult.

A web search will list a number of mortgage comparison sites – take your pick and browse the options on a few of them. Some will have built-in calculators that will allow you to compare your existing package with the range of deals that are on the market now, showing you how much you could save in the best case scenario. A few minutes with one of these sites should give you a clear indication whether now is a good time to consider remortgaging.

Mortgage comparison: finding the right deal
The sites will give you basic information about each mortgage: the lender, the rate of the mortgage and the term of any special introductory offer, the size of the deposit you will require and/or maximum LTV (loan to value) allowed, any arrangement fee attached to the deal and the total amount you can borrow. You should bear in mind that many of the best deals are only available to new customers; these preferable rates may be available for the first two or three years, before reverting to a standard rate.

You will need to weigh up the variables – or get the site to do it for you, if it has a calculator. For example, if your own mortgage has an exit fee, or the new one has an arrangement fee, you should offset this against any savings you might make. If the new mortgage has a good introductory rate for the first couple of years, but then gets more expensive, it might not be worth paying these fees. Of course, if the new mortgage doesn’t have any exit fees, there is nothing to stop you shopping around again at the end of the introductory period.

This might be a time to reconsider your own circumstances, too. Perhaps you are worried about interest rates rising, and want to take the opportunity to remortgage to a fixed deal for safety in the future. Or you might have more in savings, meaning an offset mortgage might be worth getting. Alternatively, you might have a little extra money now, and feel it is worth finding a new mortgage that allows you to overpay, therefore decreasing the overall term.

When you take out a loan – of any kind – the lender has to consider the likelihood that you will be able to pay it back. The more risk that the lender takes in what is effectively selling you their money for a given period, the higher price they will demand from you. This is why those with poor credit scores may still be able to access credit, but at much higher rates. The increased cost is to cover the losses incurred for customers who default.

Homeowner loans are secured debt, which slants things back in your favour. Secured debt means that the borrower offers some kind of collateral in return for the loan. If they default, this collateral covers the lender’s loss. This protection for the lender means that they are able to offer much larger sums and much better rates, safe in the knowledge that, in the worst case scenario, they will not lose out. The value of the collateral will determine how much money they are happy to lend you. A house is probably the most valuable possession you will ever own and, unlike most cars (another source of collateral) is unlikely to depreciate in the long term. If you need access to large sums of money at a reasonable rate, it can be worth considering this option.

Weighing up the advantages of homeowner loans
When you shop around for lenders – which you can do easily on the internet with various money comparison sites – there are a number of factors to consider. One is the amount of money you need. Typically homeowner loans start at £3,000 or so (some lenders may start at higher amounts), and go up to £100,000 or more. If you need less than this, you may well be better off with an unsecured loan or overdraft. Another is your credit history. If your credit score is poor, lenders will be more favourably disposed to you if they can secure the loan against your house. Yet another is the term of the loan. Many lenders will treat these as long-term loans, lasting anything up to 25 years and sometimes even more. Like mortgages, payments are usually monthly.

One caveat is that putting your house up as collateral means that, if you are not able to keep up with repayments, you risk losing it. And yet this probably the only way you will be able to borrow large sums of money. In any case, if you have a mortgage you are effectively in the same position. Incidentally, having a mortgage does not disqualify you from taking out a homeowner loan – the relevant factor is the amount of equity already stored in the house in the form of your deposit and mortgage payments to date.

How does equity release through a home income plan work?

A home income plan begins with taking out a lifetime mortgage with a provider for a proportion of the value of your property. In return for this percentage of your home, the provider will give you an annuity. This is an extra income, paid to you regularly for the rest of your life, and dependent in value on your age and gender. As each annuity payment is paid out to you, the interest on the amount you have borrowed is deducted, meaning that by the end of the term, you will have no interest outstanding to pay. When you (and your partner, if applicable) have either died or gone into long term care, your house is sold, and the balance of equity borrowed is repaid to your provider using the revenue from the house sale.

Due to the nature of home income plans, the annuity received is reduced. That annuity, however, is fixed, and so you will have the peace of mind that comes with knowing that your income from your home will be safe for the rest of your life. You may have the option to take out a lump sum as well as your annuity in some cases, which can prove very useful during retirement if you need to improve your home or provide help for dependants. Home income plans are generally more suitable for older home owners of around 80 to 85 years of age, due to the fact that tax relief on mortgage payments is no longer available.

If you are of the suggested age and a regular income is important to you, a home income equity release plan could be the most suitable scheme for you. If not, however, there are still options available; you may wish to look into other lifetime mortgage or home reversion methods of equity release, information for which is also available on this site. You may also find the help of an independent financial advisor, or online comparison sites, useful in making a relatively quick and well-informed decision. Equity release will impact on the amount of equity you will have left to leave to beneficiaries, and for this reason it is important to give all of your options due consideration before making your decision.

The statistics show that today, 2,430 County Court Judgements will be issued.

18,000 credit card applications will be rejected.

The average household debt, including secured loans, is £59,670.

Personal debt, meanwhile, increased by £1 million every 10 minutes in 2008.