Over the last year or so, there is no doubt that there has been a dramatic rise in the number of homes being repossessed, from previous years. The good news is that the number of houses being repossessed each quarter, appears to be falling, BUT it is still higher than in the same quarter last year (2008). Losing you home is undoubtedly, one of the worst things that can happen to any of us, but, it is a last resort, even for the banks. Read our tips on how to deal with repossession threats.
Falling Behind on Your Mortgage
None of us want to lose our home as it is not only the most valuable item we own, it is also the one we will have invested the most money into and usually is the most profitable too. We have time, money and memories invested in our homes. We know when we purchase a car the value depreciates and some cars fall in value faster than others, but generally where property is concerned the value increases resulting in your investment making a profit (though currently this is not necessarily the case). As in previous recessions the market eventually does improve and house prices will once again begin to increase. This is another reason why you need to try and avoid your house being repossessed and at the first sign of you beginning to struggle you need to look at ways to avoid this happening.
Don't Bury Your Head in the Sand
This will not resolve the problem but may end up with you getting so far behind on payments that you cannot then resolve the problem. Keep in mind that most mortgage providers do not want to start repossession proceedings and will often wait until you fall at least 3 months behind before they will begin action. Don't let it get this far and act at the first sign of not being able to make your repayments.
Contact Your Mortgage Company
You may think that contacting your mortgage company is the last thing that you want to do, but it is the first thing that you should do as they will do what they can to help. They may be able to give you a mortgage holiday, extend the term of your mortgage which will reduce your monthly payments, and may be enough to get you past your financial difficulties. This does not mean that at a later date you cannot choose to shorten your term again once you are financially secure again, though be aware that for both amendments to your mortgage you may incur an administration fee, which can be added to the balance of your mortgage though interest will be charged on this amount if you do choose to add it on.
What Help can you get to Avoid Repossession?
In the current financial climate schemes are being introduced by the Government to help people who get into difficulty on their mortgage repayments. The last thing that the government and mortgage lenders want is for you to end up losing your home and so the following schemes are being launched in England and Wales, Scotland's schemes will be quite similar but not the same:
Government Help for People on Benefits
It has been agreed that the Government will help with your mortgage payments by actually paying the interest on your Mortgage; this does not mean that they will pay all of your mortgage payment but they will help by paying the percentage which is interest. As everyones Mortgage Interest Rate differs it has been decided that the rate paid will be 6.08% and as many peoples Mortgage Rate is lower than 6.08% this means that part of your Capital Repayment will also be covered by this contribution.
Help for People who don't Receive Benefits
It has been agreed with mortgage providers that people in financial difficulty can ask for longer payment holidays. This can be up to a period of two years and so should give enough time for you to get back on your feet. Please note that interest during this time will still be applied to your mortgage and so your outstanding balance will increase as you are not making payments to reduce the outstanding amount. This is not perfect and you should try and make the payment holiday as short as possible for this reason, but many will agree is a much better option than losing your home.
Local Council Mortgage Rescue Scheme
This is for priority needs homes with an income below £60,000 per year. Priority needs means homes with people living there who are pregnant, have young children, have a disability or are elderly. If this matches your home and you are in financial difficulty then contact your Local Council and ask them about their Mortgage Rescue Scheme. They can differ dependent on your council though basically they should offer to buy or loan part of your home to reduce your payments and enable you to stay living there.
Contact the Housing Charity Shelter
Another option to consider is contacting the Housing Charity Shelter who provide advice for home owners in England and Wales; they can also advise Scottish Homeowners of their choices as the options available for Scottish Home Owners do differ from homeowners in England and Wales.
So, if you feel that you are in financial difficulty and are unsure what you can do to make sure that you don't lose your home:-
1) Don't bury your head in the sand
2) Contact your mortgage company
3) Ask about, extending your term
4) Moving to an interest only mortgage
5) Taking a payment holiday
6) Ask them if they have any further idea on how to reduce your mortgage payments
7) Enquire about Government help if you are or a member of your household is on benefits
8) Look into your Local Councils Mortgage Rescue Scheme
9) Look at all your monthly outgoings to see if any can be reduced
10) If possible take on a part time job to increase your household income.