Repossession has become a major concern for many of Britain`s homeowners in recent months, as increasing numbers of people fall behind on bills and debt repayments.

A spokesperson for debt management company Gregory Pennington said: “It`s important to remember that repossession is typically used as a last resort by lenders – as long as homeowners move quickly, they should have time to seek debt advice and tackle the problem head-on.”

Original:

Millions of mortgage holders `concerned about repossession`

Tenants are ‘recession victims’

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There are, however, other places they can turn to. Often, people can’t pay their priority bills (such as their mortgage) because their non-priority bills (credit cards, personal loans, overdrafts, etc.) simply take up too much of their monthly income. In cases like this, they may have a wide range of debt solutions available to them, from debt consolidation to IVAs (Individual Voluntary Arrangements).

Helping them reorganise their non-priority payments, these debt solutions can free up the money they need for their mortgage payments. Different debt solutions are right for different people, so they should start by seeking debt advice from a professional debt specialist, who can help them decide which debt solution (if any) is right for them.

Debt consolidation
A debt consolidation loan may be a simple idea, but it can really help people with multiple debts. If they take out one new loan that’s big enough to pay off all their unsecured high-interest debts, they’ll have just one repayment to make per month, rather than many. This can greatly simplify their finances as well as reducing the interest they’re paying on their debt.

A debt consolidation loan can be an effective way for someone to reduce the amount they have to pay every month, as they can arrange to repay the consolidation loan more slowly than the original debts, although this could well mean they end up paying more in total.

Depending on their situation, they might consider consolidating their debts by remortgaging – taking out a larger mortgage and using the cash to pay off their unsecured debts. Even if this increases their mortgage payments, it can still reduce their overall monthly expenditure, as they won’t have to make any payments to other debts. Of course, it’s always important to think carefully before securing any debt against property.

But debt consolidation isn’t always the best way forward, and some people may be better off with an alternative debt solution, such as a debt management plan – or an IVA.

IVA (Individual Voluntary Arrangement)
For homeowners with significant debts (over £15,000, in most cases), an IVA could be a good way of reducing their monthly payments, freeing up cash for mortgage payments and writing off a portion of their debt. Normally lasting five years, an IVA is a legally binding agreement between an individual and their unsecured creditors:

· The individual agrees to make regular fixed payments throughout the IVA – basically, the maximum they can afford once they’ve taken their living expenses into account. They may also have to free up some equity in their home towards the end of the IVA, so they can pay their creditors more of what they’re owed.

· If enough of the creditors accept the terms, they’ll agree to write off any outstanding debt once the IVA has been successfully concluded. They also agree not to take any (further) legal action, as long as the individual keeps making the payments.

An IVA is only an option if the individual genuinely can’t make their normal payments to their unsecured creditors – but can commit to making those reduced payments for the duration of the IVA.

Read more about debt consolidation loans & IVAs at www.debtadvisersdirect.co.uk

Article Source: http://EzineArticles.com/?expert=Melanie_Taylor

Currently, the scheme only allows banks to swap mortgages that were on balance sheets at the end of 2007.

Sir James said in his report: “I am looking with some urgency at the full range of options identified by market participants for stimulating the supply.”

But he also said that it was “debatable whether this sort of approach would help or prolong the transition to better functioning markets in the long term.”

While hinting at some options to reignite the UK mortgage market, Sir James also said that doing nothing may be the best course of action.

“The costs of action needs to be set against those of inaction,” the report said.

Sir James’ report comes as mortgage lending for new home purchases plunged by 70 per cent in June to a record low, according to figures from the Bank of England.

Lenders have struggled to secure funding in the wake of the sub-prime crisis as investors shy away from mortgage-backed securities, which many banks and building societies rely on to raise finance for new mortgage deals. As they limit the loans they offer, lenders are cutting their risks by demanding hefty deposits, excluding all but the most cash-rich buyers from the market.

The lack of new mortgages has helped drag down house prices by more than 10 per cent since the market peaked in August last year, as buyers cut their asking prices to try and tempt buyers.

Sir James is due to issue his final recommendations in time for the Pre-Budget Report in October.

Originally documented here

Tags: mortgages, loans, debt

Today in the UK there are more people than ever looking for advice on repaying their Mortgages. Are these the people who borrowed way beyond their financial means?

January and February this year have seen record breaking numbers of people asking for professional debt advice about their mortgages. Recent figures reveal that more and more people are concerned enough to get help with their mortgage arrears- so these are people who already have defaults and arrears, let alone the hundreds and possibly thousands of people who are about to default on their mortgage.

There has been a huge 35 per cent jump in mortgage related debt enquiries in the UK, over January and February 2008 compared to 2007. The good news is that people seem to be learning not to continue spending on credit cards as the credit card related issues fell by 9 per cent.

Of 5.7 million issues dealt with in 2007 almost a third of these enquiries were related to debt; a rather worrying trend. As well as mortgages, the ever increasing energy bills and general household bills are huge contributing factors to the 215,000 new debt related enquires taken this January and February.

The combination of huge increases bills like petrol and diesel prices plus rising housing costs has put additional pressure on day to day finances when they are already stretched to the maximum.

The usual Christmas credit card debt enquiries have fallen by 9 per cent in January and Febraury this year compared to last year, however overdraft enquiries are up 7 per cent on the same time period. So it looks like people are just shifting the debts to other forms of credit, it will be interesting to see the number of debt consolidation loans and general unsecured loans taken out and the number applied for in January, February and when we get to the end of March this year. I bet there are lots of people trying to shift debt to unsecured loans, although the credit crunch has lenders tightening their lending criteria, making it more difficult to get accepted for a new loan.

If you are struggling you should tell whoever you owe the debt to as soon as possible if you’re struggling to make repayments.

Simon Duffy writes for the Financial Blog a UK Finance Blog talking about all aspects of personal finance.

Article Source: http://EzineArticles.com/?expert=Simon_Duffy
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