Redundancy Fears? Things You Must Know About Keeping Your Home

According to the Council of Mortgage Lenders, 36,300 UK property were taken into foreclosure last year. According to the Council of Mortgage Lenders, this number will rise to at most 40,000 in 2011. Experts predict that this number will rise to at least 40,000 in 2011, if the Bank of England increases the interest rate. The three key factors that have helped to reduce the number of repossessions are:

  1. The record-low base rate – Although it is likely that the Bank of England will raise soon, they have kept this rate for a long time making tracker mortgages very affordable.
  2. Mortgage Payment Protection Insurance, purchased either directly on-line from mortgage providers or through a broker, has paid record amounts of claims to victims of redundancy.
  3. Initiatives by the government to encourage and influence mortgage lenders to allow people who are in arrears to stay in their homes.
  4. The benefits system provides direct intervention for people with income problems and those who are vulnerable.

These questions are for anyone who is concerned about what might happen if they become unemployed or sick and cannot work or pay their mortgage.

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1. What amount should an individual have in savings for the event of losing their job?

The average person goes without work for six to eight weeks after being laid off due to redundancy. It might be better to consider the possibility of 12 months if you live in an area with high unemployment. This should be considered minimum safety margin.

2. There are no savings

You can save money by purchasing Mortgage Payment Protection Insurance. Online price comparison websites and consumer websites like Money Saving Expert can help you find the best deals. Some people don’t qualify or can’t afford the 40-per-month premium.

3. Are you currently out of work and unable to pay your home loan?

Get in touch with the lender immediately. Major lenders will treat borrowers in this situation “sympathetically” and “favourably”. They may allow a “repayment vacation” for people they believe have only short-term problems. However, missed payments will be added to the arrears on the home loan

4. What are the pros and cons of switching to an interest only mortgage?

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Although this will not reduce monthly payments, it may be enough for a monthly budget to stop other debts spiraling out of control.

5. Instead, increase the term of your mortgage

The immediate effect of increasing the mortgage term (more feasible for younger people) is to reduce monthly payments. The additional interest that this brings to the total debt can make it quite scary.

6. Looking for advice?

Many larger mortgage companies offer telephone assistance and debt counseling. These are a better option than going to the local cashier.

7. Do you have independent advice?

Citizens Advice, the Consumer Credit Counselling Service, and the National Debtline are the most well-known. These can be particularly helpful after contacting the mortgage lender because they will also help with other debts, including speaking to lenders on behalf the person experiencing financial difficulties.

8. Can the government help with a mortgage payment?

A means-tested benefit is available for people who have only temporary problems, such as when one of the wage earners is out of work. Support for Mortgage Interest pays the interest on mortgages up to 200,000 for up to two years after 13 weeks. This benefit is dependent on the eligibility for other benefits. It can be quite complex. The Government considers it a benefit of last resort when the claimant has exhausted all avenues with their lender, and is at risk of repossession. It doesn’t cover arrears or insurance policies, nor does it pay any capital sum. Homes of financially vulnerable people are likely to be repossessed even if they don’t have the money to pay the bills.

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9. Massive negative equity. Why not just give the keys back?

This is a terrible idea. This will cause interest to continue building up until the property is sold. Repossessed properties are often sold at a bargain price or auctioned off. The debt could be sued against the person who gave back the keys if the sale does not pay for it.

10. Is it possible to rent back or sell your property?

There are many cases of shrewd practice and some untrustworthy companies. Anyone considering this should be cautious. Many people fall for the lure of having their debts wiped out in a matter of hours and still being able live in their own home by simply paying rent or lease. These companies pay a fraction of what the real value of the property, and lease agreements may last as little as 12 months. Tenancy agreements typically last six to twelve months. The rent or lease payments can increase after that. If the tenant fails to pay, they can be expelled. Worse, the company can sell the family home that the tenant thought they secured at a significant profit to the public and leave the tenant with nothing.

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11. Do vulnerable people get extra assistance through State Benefits?

The Home Loan Rescue Plan is a local authority program that forms part of their social housing provision. The council will conduct an assessment of the property, and depending on the circumstances, they may consider a shared equity loan’ or scheme that allows the government to mortgage the rent. A Registered Social Landlord (RSL), or an independent housing organization registered with the Tenant Services Authority will be involved by the council. It is important to understand that the equity in the home will be lost by the owner.

12. What should the average family do?

The average family cannot rely on the state in such circumstances. They would need to be in severe financial hardship to qualify. These benefits are not generous, and repossession can still be possible for other debts that are not covered by the mortgage-specific schemes. People with significant debts may have taken the debt consolidation route. They will be able to guarantee payment of the consolidated loan against their equity. Consolidated loans are not considered mortgages by the benefits system. These finance companies can still take over a home if they don’t pay their customers.

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Any family without enough savings should apply immediately for Mortgage Payment Protection Insurance. It can only be purchased if the applicant is working in steady employment and the firm has not made any redundancies. If they are eligible. This cover is very affordable because they pay a monthly premium that’s less than the cost of a tank fuel for their family vehicle.

People choose to receive a benefit of approximately 1,000 per month. They receive it if they become disabled, sick or unemployed. If you don’t have a mortgage or want to increase the benefits under your existing Mortgage Payment Protection Policy, then Short Term Income Protection Insurance is for you. Specialist providers on the internet offer the best value and the UK Governments CFEB (previously FSA), consumer website, the Money Advice Service strongly recommends that purchasers shop online for the best deals.