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Threatened with repossession? What you should do

John Fitzsimons
by Lovemoney Staff John Fitzsimons on 07 July 2012  |  Comments 8 comments

As new research highlights the areas of the country most at risk of repossession, we look at what to do if you're struggling to pay your mortgage.

Repossession. The nightmare scenario for homeowners. According to mortgage lenders, 45,000 homes will be repossessed across 2012. And new research from Shelter has identified the areas most likely to be hit.

As part of its repossession research, Shelter highlighted the top five repossession hotspots.

In top place was Barking and Dagenham, which had 8.44 repossession claims for every 1,000 homes in private ownership. That’s double the national average, and almost eight times more than West Dorset.

Other hotspots included Knowsley, Thurrock, Lewisham and Rossendale.

Local authority

Number of claims per 1,000 private homes

Barking & Dagenham

8.44

Knowsley

7.20

Thurrock

6.51

Lewisham

6.46

Rossendale

6.46

So why are certain areas suffering more repossession claims than others?

Rachel Orr, Campaigns manager of Shelter, said that the research had found that areas with higher unemployment tended to also suffer above average repossessions.

She added: "But it can happen for all sorts of reasons. We speak to people everyday who are at risk of repossession - they might have lost their job, but it might just be a small reduction in the number of hours they work. Or simply that their wages aren't rising as fast as their food bills and fuel bills."

If you are having issues with your mortgage payments, the first step should always be to talk to your mortgage lender. There are a number of ways they can help:

The lender may agree to the following in order to help you manage your repayments:

  • Increase the term of your loan.
  • Accept reduced payments from you in the short term.
  • Add any repayment debt to the amount you have borrowed.

If you can’t reach an agreement with your lender or you can’t pay at all, it’s time to get some advice

Matt Hartley, Media Officer of the Consumer Credit Counselling Service, explained that debt charities can try to negotiate with lenders on your behalf, but also help you get to the crux of why you are struggling to pay.

He added: "It's important to look at your whole budget, all of the debts you need to pay, and come up with an affordable way of dealing with them."

The worst thing you can do is ignore letters from your lender, and just hope that your worries will disappear. If you take action early, there’s no reason why you won’t be able to stay in your home.

More on mortgages:

How to...get out of negative equity

What to do if you're struggling to pay the rent

Mortgages: reasons to be cheerful

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Comments (8)

  • Matt5
    Love rating 0
    Matt5 said

    Well Done, You always come up with real life solutions. I really like and appreciate all your topics and their solutions.

    Regards

    Report on 07 July 2012  |  Love thisLove  0 loves
  • Mike10613
    Love rating 599
    Mike10613 said

    According to Shelter 150,000 are in arrears with mortgages, add that to the 100,000 in arrears with rents and others and there are over a quarter of a million in a housing crisis.The government's answer is austerity and have cut down even more than they budgeted for. We need to build and renovate more homes. If there is a housing crisis with record low interest rates, what will happen when interest rates normalise?

    Report on 07 July 2012  |  Love thisLove  0 loves
  • charles125
    Love rating 53
    charles125 said

    The sad truth is that millions of people in the UK are just one paycheck or one illness away from homelessness.

    Also several million people fund a substantial part or all of the mortgage payments on their credit cards.

    As soon as it reaches the point where you can't afford the monthly credit card payments and interest is increasing your credit card debts each month, you will soon reach breaking point, without going into default on your cards. Before you do this, transfer all balances on any Current account bank credit cards or on a credit card by your building society or building society group onto other cards. Then notify your mortgage company with income and budget sheets of your financial difficulties and see what they can suggest.

    Before defaulting on any credit card payments, write to the independent credit card companies to try to negotiate a voluntary payment plan and stopping interest and charges on the credit card. Include a cheque for what you can afford each month. This could be as little as £1 per month per independent card. Enclose budget and income sheets. It may take several letters. Avoid all communication with them by phone.

    Go to CCCS online. Access their debt remedy and it walks you through filling in details. Note their confidential reference number, though you will need to login with less than a 90 day gap to retrieve/amend details. You can print copies of your debts, budget and income once you have filled them in from the CCCS pdf booklet produced. Ignore any suggestions to sell your property to clear your debts!

    Credit card debts issued by your bank can result in immediate clearance by the bank without informing you if you default on payments.

    The only caveat or caution is that you must not attempt to get further credit once you are on a voluntary payment plan with some credit card lenders, except for immediately repayable emergencies. To do so could be construed as fraud in not having the means for repaying any further credit. Banks could also possibly call in overdrafts if they see your credit record plummet. There are credit cards you can 'repay' smaller overdrafts with via cash transfers. Building societies can otherwise transfer debts on their own credit cards onto the mortgage, making repossession more likely.

    Once you have a voluntary payment plan with independent credit card companies, cancel direct debits and obtain details of how to pay by monthly standing order which you control. Only pay what you can afford each month, and remind the card companies that you are paying as much as you can afford after essential monthly spending. You will get some scary letters from them, asking for full repayment or more often 'referring' your debt to an agency run by them for debt-collection. Just check with Google if any such 'supposed' transfer takes place. If it actually is an independent debt-collection company you will have to re-negotiate payment arrangements but the same rule 'what you can actually afford' each month applies.

    You will need to re-submit budget and income sheets every 6 months or annually depending on the card company. some are more trouble than others, but generally, providing you are paying regularly (and a fair share to each independent lender) they will will not usually proceed further with active pursuance over and above your monthly payment as they know a court would not order a higher payment. it is possible later down the road that they might seek a charging order against the sale of your property. This is not an order to sell (which is most unlikely) as long as any individual debt is only a fraction of the house value. As long as you pay them something each month, it is difficult and unlikely they'll take further action against you at least in the short term eg 5 years or less. After this amount of time it is possible they might press you to seek an alternative such as taking out an IVA. Or you might be lucky and they might further extend the voluntary payment plan! Each case is considered on an individual basis based on family and other circumstances.

    You must inform card companies immediately if your finances improve, or worsen significantly. Do inform card companies if you have medical conditions such as depression and anxiety and/or on employment and support allowance on medical grounds.

    IVAs are generally not suited to debtors who own property. They take about £1500 fees to prepare, and a panel of debt companies decides whether to accept the IVA. The fees are payable even if the IVA is not allowed. There is more likelihood of success if you have many rather than just one or two credit cards. But the fourth year of an IVA involves having to take out a second mortgage to clear debts - so is not a feasible option if you own or have an owned share in a property, as any default on the second mortgage would cost you your house/flat apartment etc..

    Above all write to your mortgage company as soon as you know you are facing financial problems and before defaulting on or sending a lower than arranged payment.

    If interest rates rise, many many more people are going to be seriously affected.

    Report on 07 July 2012  |  Love thisLove  1 love
  • charles125
    Love rating 53
    charles125 said

    - And a very large number of people are being very seriously affected by very steep credit card rate rises.

    (Re: several million people fund a substantial part or all of the mortgage payments on their credit cards.)

    The problem escalates if mortgage rates rise. This often happens after a fixed rate ends and new fixed rates are invariably more expensive. Add on increased pressure on using cards towards or for mortgage payments, and you can see why the Government and Bank of England are trying to keep base rate low! They know any base rate rise might bankrupt more than a few credit card companies!

    Report on 07 July 2012  |  Love thisLove  0 loves
  • Freddo Goodowinno
    Love rating 1
    Freddo Goodowinno said

    Tell me if I'm wrong - wasn't it immoral and dishonest bankers and financial institutions that got us into this mess?? Something to do with giving mortgage loans to those of us who couldn't afford them rings a bell - didn't they even invent a term for it - "sub prime". Didn't that also have something to do with house prices being driven up - "win win!" - it could never end??

    We can resist and stop repossession - if we want to?. We don't have to give our homes up. Stick together, support each other and put many couples of fingers up to those immoral, dishonest persons who caused this mess in the first place, and then try to take our homes away when we fall into the hard times they've caused! Then, to rub salt in our ever deepening wounds - we're made to bail them out, several times over!!! A roof over ones family's head is the most basic human need, and the most basic right!! IF WE STAND UP TOGETHER THEY HAVE NO POWER AND WE CAN STOP THEM!!!

    PS - If you think the housing crisis is nearly over - believe me - ITS ONLY JUST BEGUN!!!!!

    Report on 08 July 2012  |  Love thisLove  1 love
  • mambach
    Love rating 33
    mambach said

    Important note: if you lose your job, start looking for a new house. Preferably something small and horrid, in the ghettos.

    Housing Benefit will not pay mortgages for the first six months - after that, only interest. If you have savings enough to cover you, you can't get JSA, and have to eat out of your reserve fund too.

    Insurance against job loss frequently refuse to pay out eg if you're redundant.

    Many landlords will not accept HB clients.Only the suckyest places do, since people who aren't working this week apparently morph into monsters, regardless of how good a tenant they were previously.

    Of course, any property that will take you will likely be miles from a bus route that might take you to somewhere where there's work.

    Report on 08 July 2012  |  Love thisLove  0 loves
  • edwardmk2879
    Love rating 57
    edwardmk2879 said

    Some good posts above.

    What I find fascinating is that the mortgage money is created out of thin air by the fractional banking system. The request for funds to borrow is the lever pulled to create the money. No wonder it's so hard to start a bank. They don't want competition for their highly profitable rigged game. Of course, if everyone stops borrowing, then they start to hurt. Then add defaults on bad loans they should never have issued, and the game turns sour for the banks. Central Banks have recognised the problem and dropped base rates to allow retail banks to re-capitalise. They're also re-capitalising at our expense by wacking up interest rates on credit cards to over 25%. The other method is to get almost free funds by borrowing newly printed money from the Fed, The B of E the ECB etc. Those newly printed funds devalue all of the existing money, hurting the poor and vulnerable on fixed incomes by creating price inflation in petrol and food prices, and hurting unfortunate mortgage holders by destroying jobs

    A nation of lions led by donkeys ( apologies to Lord Rees Mogg )

    Report on 08 July 2012  |  Love thisLove  1 love
  • time2go
    Love rating 66
    time2go said

    I imagine once house prices start rising, reducing or eliminating negative equity, banks will be more inclined to force more repossessions.

    Don't you just love bankers???!?!?!!?!?!?!!!

    Report on 14 July 2012  |  Love thisLove  0 loves

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