Whilst it’s all well and good to have your own home, your property could disappear in a puff of smoke it you fall behind with repayments and already many people have lost their homes over the past couple of years because they have been unable to keep on top of repayments on their mortgage.

Over the past year things have been very difficult for many homeowners in the UK, with many suffering as a result of the recession, which resulted in massive job losses. The added pressure of the credit crunch added to the financial problems that many homeowners were experiencing, and regrettably many were unable to keep up with their repayments.

With banks clamping down more seriously than ever on mortgage arrears many quickly found themselves losing their homes, which were swiftly repossessed by the banks who were desperate to shore up their own finances by selling them as quickly as they could.

Whilst the situation as eased off a little now, partly due to pressure from the government to use repossession only as a very last resort, there are still many people who may be finding it difficult to make their mortgage repayments and could end up losing their homes eventually unless steps are taken to rectify the problems.

Industry experts are warning those that do experience difficulties in making mortgage repayments not to bury their heads in the sand and hope that the problem will go away. Instead, homeowners that are in financial trouble need to get advice as quickly as possible in order to try and sort the problem out before it gets to the repossession stage.

One option for homeowners is to speak to their bank or lender about their situation, being honest about finances and making suggestions about how they might be able to sort things out. Most lenders will be sympathetic about homeowners’ situations as long as they are made aware of the problem.

For those that do not get any joy from their lender there are also a number of debt advice charities that can help, such as the Consumer Credit Counselling Service or the Citizen’s Advice Bureau.

Dealing with mortgage arrears is a post from: Glitec

The Labour government is said to have been pleased with regards to the news of the fall in repossessions, as it is keen to drum up support from voters in the run up to the general election later this year.

A number of schemes and measures have been put into place by the government to try and make improvements within the turbulent mortgage and housing sector over the past twelve months, and the figures seem to indicate that some of these have paid off to some degree.

John Healey, the Housing Minister, claims that around 330,000 families have benefited from various schemes that have been put into place by the government over the past twelve months. He also said that many more families were likely to receive help through these initiatives over the course of this year.

In the meantime the Council of Mortgage Lenders has stated that its predictions set for 2010 with regards to arrears and repossessions may be a little gloomy given the low interest rate.

Michael Coogan from the Council of Mortgage Lenders said that the reduction in arrears and repossessions was down to a number of factors and people, stating: “The fact that mortgage arrears and possessions did not rise by as much as we feared in 2009 is testament to the effect of low interest rates and a great deal of concerted effort by lenders, government and the advice sector to help borrowers to address financial difficulties when they occur.”

13 percent drop in UK repossessions is a post from: Glitec

The level of repossessions in the UK soared to such a point that the government has been trying to take action by putting measures into place to try and reduce the level of repossessions.

It has now emerged that the UK’s financial regulator, the Financial Services Authority, has proposed new regulations that could provide increased protection for homeowners that are in arrears with their mortgages.

The FSA has stated that is wants to ensure that homeowners that have fallen into arrears get fair treatment from lenders, and in particular this applies to those that have had to borrow money from specialist lenders.

Part of the new proposals from the FSA include ensuring that homeowners that are not hit with unfair and unnecessary charges by lenders as a result of being in arrears.

The regulator also wants to make sure that repossession action is only taken as a last resort by lenders after all other options have been looked at.

The proposals come as part of a review that the Financial Services Authority has been carrying out into the workings of the mortgage market in the UK. This came after earlier research that indicated some homeowners in arrears were being treated aggressively by lenders.

The FSA stated: “Today’s proposals underline the standards that firms must meet and will help to ensure that homeowners in financial difficulties are treated fairly. Lenders need to be in no doubt of their obligations to customers who fall behind with payments and must realise that such circumstances are not an opportunity to create further profits.”

FSA proposes new rules for those in mortgage arrears is a post from: Glitec

Higher payments may cause some problems to their monthly budget as they try to accommodate the higher rate of interest reflected in the payments and as a result they may start to have problems making the payment, causing them to fall behind. Missing one or more payments puts the mortgage account into arrears, which can have serious consequences, such as repossession by the lender.

If you find it harder and harder to keep your mortgage payments current, there are a few things you can do to avoid going into mortgage arrears:

Switch mortgage lenders -  Shop around among the many mortgage lenders to find the most competitive deal for your needs. Many lenders have low interest mortgage loans and easy repayment terms that may be better than your current loan. Once you find such a deal you do have to move quickly because many lenders have a set time period in which you can switch your mortgage.

A mortgage for £180,000 at the APR of 7.94% carries a monthly payment of £1394. However, if you switch to a lender offering a lower rate, such as 5.99%, you can shave about £226 off your payment each month. In order to take advantage of such a deal, you do need to have a perfect credit rating and missing even one payment in the past year would exclude you from such a deal.

According to Vivienne Starkley of Equal Partners in London, “If you are struggling with your finances you should always make your mortgage a priority and get on to a low rate fast. Getting a bad payment record limits your options.“

Switch to an interest only mortgage. Many lenders will permit you to switch your mortgage loan from one on which you make payments on the balance and the interest to one on which you pay only the interest that has accrued in the month on the outstanding balance.

By taking such a step, it will take a lot longer to repay your mortgage, but it will give your finances a bit of a reprieve when you need to have extra money. You can save hundreds of pounds each month that will enable you to keep your mortgage up to date and still have the option of paying more than the interest when you can afford it so that you do bring down the outstanding balance by a small amount.

One of the benefits of taking this step is that you do not have to switch lenders and there are no fees associated with the switch, which can take place in the middle of a term. However, you do have to realize that you can’t continue in this manner forever and that you will have to take steps to repay the outstanding balance after you have your finances straightened out.

Extension of the term. You can gain some financial relief by extending the term of your mortgage so that your loan is spread out over several more years. This will lower your monthly payment allowing you to avoid arrears on the mortgage. The average mortgage is set up so that it is repaid in full over the course of 25 years.

There are lenders who offer longer terms and by taking this step you can decreased your monthly payments and still pay an amount on the outstanding balance each month. Even extending the term by five years will save you about £85 per month.

There may be a nominal charge for making this change to your loan agreement, but you can make the change at any time. The disadvantage is that it will take you longer to become mortgage free.

Take a look at mortgage insurance. If you are worried that you may lose your job or become too ill to work, you can consider the possibility of taking out mortgage protection insurance. This insurance will make your monthly payments for you in the event that one of these things happen to you. However, there is a lot of controversy surrounding such insurance policies in that the premiums may be quite high and the payments on your mortgage are usually for a two-year period or less.

Keeping Your Mortgage Payments Up to Date is a post from: Glitec

The fall in house prices coupled with higher living costs, high inflation, and high borrowing costs has left an increasing number of consumers struggling to keep on top of their mortgage repayments, and this in turn has resulted in a higher level of repossessions, with around one hundred and twenty five families a day losing their homes to repossession for that period. There was also a rise in the number of borrowers in arrears, and an increase in the number of properties going under the hammer at auction.

One auction professional recently stated: ‘The dramatic rise in repossessions at auction is the combination of two factors, the slowing housing market in the UK and the increasing desire of Banks and Building Societies to liquidate their repossessed stock.’

As the recession continues to take a hold in the UK, it is though that the situation could get even worse, with many expected to lose their jobs, which would further impact upon the ability of many homeowners to keep up with their mortgage repayments.

Professionals from the mortgage industry have urged consumers to ensure that they contact their lender to try and reach some sort of solution before things get as far as repossession if they find that they are struggling to make their mortgage repayments. An official from the CML said: ‘Most borrowers who face payment problems successfully keep their home by working with their lender.’

He added: ‘The Government has taken some helpful steps towards targeted support for some of the most vulnerable households, but with a worsening economy now needs to make it a priority to go further. ‘Increased help with housing costs is needed for a wider range of borrowers facing unforeseen repayment difficulties where there would otherwise be little prospect of early improvement. Next week’s Pre-Budget Report should concentrate on making much more assistance with mortgage payments available for people whose income is reduced, as help is currently far too limited.’

He went on to state: ‘Looking ahead, conditions in the wider economy suggest a worsening picture for mortgage arrears, however carefully lenders handle their treatment of borrowers in difficulty. But while lenders cannot change the underlying causes of financial difficulty, such as unemployment, they can make sure that their response to borrowers is constructive and seeks to avoid repossession wherever other solutions can be found.’

Are you facing repossession? is a post from: Glitec

The second quarter of the year saw 11,054 repossessions compared to around 6,500 the previous year during the same quarter, and this equated to a 71% increase. Officials from the FSA have also said that there has been a rise in the number of people that are struggling to keep on top of mortgage repayments, which means that there has been an increase in the number of households facing future repossession.

Some industry officials have expressed concern over these figures, and this is because the released figures for the second quarter came before the global financial crisis became even worse. This indicates that future figures could show that the situation is now even worse.

An official from housing charity Shelter said: ‘These figures are not only shocking and worse than expected, they highlight the crippling severity of the credit crunch on ordinary home-owners.’

Vince Cable from the Liberal Democrat Party said: ‘The collapsing housing bubble will produce large numbers of casualties, as people fall into arrears unable to sustain mortgage payments. If conditions deteriorate further, the current stream of repossessions will become a torrent.’

Leading economist Howard Archer said: ‘The fundamentals continue to be largely stacked against the housing market, and it seems odds-on that prices will fall considerably further.’

Repossession levels soar is a post from: Glitec