2,500,000 home owners in peril
THE MIRROR - 18TH NOVEMBER 2002
One in four householders is in danger of becoming homeless – and millions more face the same grim prospect because employers increasingly offer short-term contracts rather than long-term jobs.
More than 2,500,000 homeowners have “insecure” positions with increasingly little chance of meeting the mortgage, says Shelter director Chris Holmes.
And the charity for the homeless reckons that with employers demanding more “flexible” working practices that figure is set to soar.
Shelter found that:
• The self-employed are nearly twice as likely to run into mortgage arrears.
• Part-time workers were nearly three times as likely.
• Part-time, self-employed workers are more than five times at risk of losing their homes.
More than 8,500,000 people are in less secure forms of employment – and that figure is expected to grow to more than 11 million over the next eight years.
But the Government has weakened the social security safety net that helps homebuyers who lose their jobs.
Anyone who has taken out a mortgage since 1995 gets no aid with their mortgage interest for their first nine months out of work.
By that time, your mortgage arrears would put your home in jeopardy.
But even after that, there’s no guarantee that the DSS will meet your mortgage interest.
You qualify for help only if you and your partner are out of work and you have no savings to speak of.
Fortunately, new specialist lenders now offer mortgages to people with irregular jobs or whose income is uncertain – as several Mirror readers can testify.
Jason Collis, 26, landed a good job as a broker consultant with an insurance company after moving from Wales to Reading.
He is paid a basic salary plus bonuses depending on how much business he sells.
But he had no evidence to prove exactly how much he would be earning.
And his wife, Carol, 29, a primary school teacher only works part-time because she has to care for their 16-month-old son Daniel.
But a broker with the Independent Mortgage Collection network put Jason in touch with Versa – a specialist lending arm of the Britannia building society.
Set up to help borrowers who find themselves in extraordinary circumstances, Versa agreed to give Jason an £85,000 mortgage on a house at Thatcham, Newbury.
And it offered him a fixed rate of 7.24 per cent for six years – just 0.25 per cent more than the Britannia charges ordinary borrowers.
Malcolm Lodge had a similar experience. He took a job with Central Trains as a self-employed caterer running a snacks trolley selling tea, coffee and sandwiches on trains between Norwich and Liverpool.
But when Malcolm, of Radcliffe-on-Trent, Nottinghamshire, want a remortgage to pay for a new car, his then mortgage lender didn’t want to know because he was no longer in “secure” employment.
Fortunately, a broker found him the £35,000 loan he needed from Kensington Mortgage.
Ronald Wylie, who runs a business repairing and selling second hand computers, couldn’t get a mortgage from traditional lenders because of past debts.
But the Money Store fixed him up with a £34,000 loan on the £42,000 house he wanted within a week of his application.
Driving instructor Barry Taylor, 39, wanted to buy a three-bed roomed house in Bletchley, Buckinghamshire, for his wife Jackie, 37, and their three children.
But lenders turned him down because he had been in business for only two years.
Barry got in touch with Kensington Mortgage which agreed to lend him the £32,000 he needed to buy the £40,000 house.
Shelter director Chris Holmes says: “These specialist firms are helping, but I’d like to see more flexibility form lenders.
“I’d also like to see an affordable, comprehensive insurance product which offers mortgage payment protection insurance to everyone.”
Here’s what you can do
If you have difficulty getting a mortgage, contact one of these specialist lenders: Money Store, Independent Mortgage Collection, Kensington Mortgage, Paragon Mortgages or Mortgage Works.
No matter who you borrow from, ask your lender if they can fix you up with sickness, accident and redundancy insurance suitable for your needs. If they can’t, an independent financial adviser may help.
A new policy called Mortgage-Guard offers cover to the self employed and works who have had fixed-term contracts with one employer for over two years. Details from the broker Burgesses. Shelter offers these tips to avoid losing your home if you run into trouble:
• Tell your mortgage lender right away and keep them informed of any change in your circumstances.
• Try to reach agreement on what you can realistically afford to pay.
• Try to increase your income and reduce your outgoings. Taking in a lodger might help – but get your lender’s permission first. If you are on a low income you may qualify for family credit.
• If you can’t work, contact the DSS immediately to see if you qualify for any help. Check your insurances to see if you can claim on any of them.
• Seek advice from a Shelter housing aid centre, or Citizens Advice Bureau.
