Don’t get caught by mortgage arrears
DAILY MAIL - 31ST OCTOBER 2007
Indebted borrowers have been warned to take steps to avoid losing their home, as repossessions are set to soar next year.
Those in arrears on their mortgage are most at risk, though anyone coming to the end of a cheap fixed rate deal should also switch to avoid, or at least limit, a potential £290 monthly payment hike on a £130,000 home loan.
The Council of Mortgage Lenders, a trade body for mortgage providers, expects 30,000 to face eviction in 2007, up from 22,700 last year. That figure is expected to rise to 45,000 in 2008.
Lenders are taking a tougher stance on arrears.
If you are struggling, tell your lender; they may put you on a special repayment plan or freeze interest. Bernard Clarke, from the CML, says: ‘Most lenders see repossession as a last resort. You should talk to your lender to discuss a payment plan.’
You can extend the term of your mortgage or move from a repayment mortgage to an interest-only deal. Both options require discipline. Your monthly payments will fall, but you will pay more in the long run, so switch back when you can.
Payment protection insurance will cover the cost of your mortgage, typically, for 2 months if you lose your job or cannot work. It can cost from £3 for every £100 covered. Buy it from a specialist such as British Insurance, because most lenders charge more.
Remember, it won’t pay out if you knew you were about to lose your job when you took it or if you are self-employed.
