Recent interest rate rises have added an extra £15 a month to the cost of a £100,000 repayment mortgage, and have increased the risk of debt and repossession for many householders.
It is very easy to get into troubles with mortgage repayments, especially as so many people borrow up to the hilt to get the house they want.
What can you do to avoid repossession?
The number of bankruptcies increased by 44% for the last 12 months, reaching a total of 113,089.
You can obtain a bankruptcy order if you owe more than £750, though this is not an option to be taken lightly. An official takes control of your money and property and deals with your creditors. Some of your possessions, including your house, may have to be sold.
In addition, the record of your bankruptcy will last six years.
Individual Voluntary Arrangement
An IVA is a way of sorting out debts without going bankrupt, and is a legally-binding agreement to pay a monthly sum you can afford. To enter into an IVA, you need to owe more than £15,000 to two or more lenders and be able to pay at least £250 per month.
Contact your lenders
If you are struggling to cope, don’t bury your head in the sand, get in touch with lenders as soon as possible. You may be able to negotiate lower repayments.
If you are paying your lender’s standard variable rate, you may be able to make substantial savings by remortgaging. Fixed rate mortgages could protect you from interest rate fluctuations, and will allow you to plan your repayments in advance.
Find a cash buyer for your house
If your debt situation is getting out of control, and you have reached the point where the courts are involved, one way to avoid repossession is to sell your home to a property cash buyer.
Though you may not receive as much for your home compared to listing with an estate agent, you will be able to sell your house quickly and use the money to pay your debts off. You can even sell and rent back your house to avoid the hassle of moving home.