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Your Money > Mortgages Articles > A man possessed...
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By Sarah Modlock
The Council of Mortgages lenders estimates that 75,000 people will lose their homes this year - the highest number since 1991. Five tips to avoid being repossessed Number crunching: repossessions on the rise Via its ownership of Northern Rock, the government has become one of the biggest repossessors in the property market. In the first six months of last year, the bank took almost 1,500 homes into its possession. This figure is expected to double this year. Still, it's important to remember that these numbers remain relatively small when seen in the context of the 11.74 million mortgages in the UK. "The number of people facing difficulty needs to be kept in perspective," says CML chief Michael Coogan. "The good news is that most people are coping well and continuing to pay their mortgages in full, despite the higher costs of food and fuel and the higher mortgage rates now prevailing in the market... No-one wants to see a household lose their home, and repossession typically leads to a loss for the lender as well. "The focus of lenders' arrears management policies today is on seeking realistic alternatives that balance the interests of customer and lender. Anyone who thinks they may be heading towards financial problems should contact their lender to discuss their options - the earlier the better," he advises. Buy-to-let: Troubled tenants It's worth noting that the CML's figures relate only to first homes. There are also concerns about the buy-to-let market. Some lenders, such as Bradford & Bingley, are more exposed to these loans than others. Figures from homeless charity, Shelter, reveal that between the first half of 2007 and the first half of 2008 the number of BTL mortgages ending in repossession doubled. Adam Sampson, Chief Executive of Shelter, says: "These figures show the shadow of repossession is no longer just cast over homeowners, but also thousands of innocent renters who have no idea how close they are to eviction." "Sadly, the impact of repossession can be even greater for tenants, who, despite paying rent on time, can find themselves with very few rights and the first they even know about it is when the bailiffs start banging on the door. "The Government must... protect people who may find themselves homeless because their landlord is being repossessed, by making sure courts treat tenants fairly and give them enough time to find a new home." How protected are you? There are also concerns that homeowners think they have more protection than they actually do. "With current fears that unemployment is set to grow, there is no doubt we are inching ever closer to the dark days of the last repossession crisis," Sampson adds. He believes the real horror is that today struggling homeowners have less protection than in the 1990s and don't even realise it. "[Our research] shows a quarter of mortgage payers think they would receive prompt state help if they could not pay their mortgage. In reality, because financial help for homeowners in difficulty was cut after the last housing crash, nothing would kick in for nine months, which is too late." The Financial watchdog, the FSA, has warned lenders that repossession should only be used as a "last resort". It says mortgage lenders could face heavy fines or be barred from particular markets as part of a regulatory crackdown on firms that put excessive pressure on homeowners falling behind on loan repayments. Ministers, meanwhile, have promised help for struggling homeowners, with the creation of a mortgage repayment scheme for borrowers threatened with repossession. The British Bankers' Association says that banks are acting to support mortgage customers who are finding it difficult to meet their monthly repayments. The CML says it is doing all it can with the government, the FSA, consumer groups and the courts. But is it enough? Not according to the Royal Institution of Chartered Surveyors (RICS).
"The Government has failed to listen to the property industry and respond to market pressures and their proposed measures will have little impact on those suffering as a result of the current crisis," says spokesman James Scott-Lee. Ouch. RICS says that the government needs to make it easier to get a mortgage and stop "tinkering around the edges". Five tips to avoid being repossessed If you're having trouble paying your mortgage - or think you might start to struggle soon - then these tips should help: 1) Tell your lender as soon as possible: they will be sympathetic and will provide as much assistance as possible. The earlier you make contact, the more options there are available to resolve the problem. 2) Get advice: there are organisations which offer free and independent money advice such as the National Debtline or the Consumer Credit Counselling Service. 3) Check the options available to you: your repayments may be covered by an insurance policy, or you may be eligible for state benefits which could increase your income and/or help with your mortgage repayments. 4) Don't take out more debt: Robbing Peter to pay Paul will only make things worse. 5) Don't return the keys to your lender: Known as 'jingle mail' in the US, where it is common, this step will not free you from your debts. Useful links: | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Home repossession is in the news again - and again, for the wrong reasons. Latest figures show that, in the first three months of this year, the number of homes being taken over by lenders increased by 50%.
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