Hybrid Mortgage Products: Lenders promote the advantages of new products but rarely, if ever, point out pitfalls that may be lurking in the small print.

Isn't it great to have all these different attractive mortgage products available to us in these post-Celtic Tiger days? It's almost like going to the supermarket, where you find all types of different convenience products, attractively packaged and promoted to simplify your very busy lifestyle.

Tired after a hard day's work and a little confused by the variety of TV dinners on offer, you forgo the reading of the small print on the packet and buy one, only to arrive home and find it has a flavour you do not like or has ingredients to which you are allergic.

By now, however, the store has closed and your hunger is intense, so you suffer it. These new mortgage products are designed similarly.

While the products themselves may be of good quality, meeting all the regulatory criteria laid down for such products, they can - like the TV dinner - be attractive to those customers who, tired and/or under pressure, see the new product as the perfect answer to their problems. These mortgage products are also well wrapped, presented and sold to the customer. Like our tired shopper, the purchasers can also make the mistake of not paying sufficient attention to the terms and conditions contained in the small print and buy the product, being motivated only by the immediate task of satisfying the present need.

That is so whether it is a case of helping your child enter the property market, securing finance for the holiday that will save your marriage, buying a new car to keep you up with the Joneses or borrowing to pay off existing debts.

Why are there so many new products? As the value of houses is increasing as a result of the property boom, many people find themselves with a growing gap between the balance of the mortgage they owe to their building society or bank and the actual value of the property. This difference is called equity.

Recognising this, many financial institutions are now targeting people who have such an asset. With strong competition in the market, so-called special offers or family friendly products are often used to entice or, in some instances, emotionally cajole people to re-finance or overspend.

The banks and lending institutions promote the advantages of the product but rarely, if ever, point out the pitfalls that may lurk in the small print.

Before being lured into the cosiness that these new products offer, we in the Money Advice and Budgeting Service (MABS) would advise prospective purchasers to ask themselves what would happen if there was an unforeseen change in their circumstances, for example, illness, unemployment, relationship breakdown, death in the family and so on.

What the banks and building societies are doing is making it easier for you to borrow for whatever reason. They are satisfied as they have the security of your home if things go wrong. They hold the title deeds to your home.

You, on the other hand, could find yourself in serious difficulty very quickly if your life circumstances should change.

Your home could be at risk.

This is a likely possibility if you have no other substantial asset to cover any borrowing agreements or guarantees you may have entered into.

We would advise people to keep clear blue water between their home, any mortgage secured on it and any other credit products you might be tempted to purchase.

Buyer beware is as important with these new products as it is with any other purchase.

We would also advise parents to think long and hard, and get independent advice before they sign up to so-called family friendly products in order to secure a mortgage for a son or daughter.

This is particularly the case if the parent has no other asset to use other than the family home to pay off the debt if things go wrong.

One of the most attractive products, particularly for the over- indebted person, is the consolidated loan or re-mortgage facility. This product typically involves re-financing the existing mortgage and other credit commitments with one new mega-loan, secured on the family home. This can be done with the existing mortgage lender or through a different credit institution. Again there is little risk to the lender as all mortgages are secured on the family home. It is less easy to see what is in it for the consumer.

If you don't default, you will repay a considerable amount over the lifetime of the loan.

You could be paying for that car for many years after it has been consigned to the scrapyard. If you do default, then your home can be repossessed.

Though the financial institution can't lose, you can.

Re-mortgage products often encourage people to change unsecured debts (such as credit card balances, credit union and personal loans) into long-term mortgage debt, secured on the family home. Previously, if you defaulted on any of these loans, your house wouldn't be directly at risk.

But once you re-mortgage, repossession will become a possibility should you find yourself unable to keep up with the repayments. The costs involved in re-financing can be considerable.

Solicitor fees, stamp duty, legal searches, registering a new mortgage and other unforeseen costs can reduce or wipe out the potential savings involved in re-mortgaging.

Ultimately, while all these new mortgage products, like the TV dinners, are good in themselves, they may not be, as they first appear, what you need!

We would advise people who are intending to buy one of these new mortgage products to think long and hard, and get independent advice where possible.

We would also advise people who are worried about debts and, because of overspending, say at Christmas, are tempted to use one of these new mortgage products to pay off credit cards or other loans to resist the easy option and seek confidential advice from your local MABS Service.

Michael Culloty, is east region MABS development office