Debt consolidation blog
The UK’s economic problems aren’t limited to ‘just’ the credit crunch or ‘just’ the fall in house prices. Unfortunately, bad news often leads to more bad news: today, the credit crunch means many people can’t get a mortgage, which further depresses demand for – and prices of – houses, which means less money for homeowners, homebuilders and the whole economy.
Read More...Inflation is a measure of the average rise in prices of goods and services over time. In the UK, it is measured once a month by the Office of National Statistics (ONS), who compile a ‘basket’ of approximately 650 goods and services that represent the average buying habits of the public, and calculate the average rise in prices based on this.
There are two main measures of inflation that take different factors into account: the Consumer Price Index (CPI), which the Government use officially, and the wider-ranging Retail Price Index (RPI).
In millions of UK households, every penny is already accounted for: from food and petrol to utility bills and debt repayments, it’s as good as spent before it’s even earned.
So when Mervyn King, Governor of the Bank of England, tells us we’re facing a “squeeze on real take-home pay” – and we hear that the cost of gas and electricity could rise by up to 40 per cent this winter – finding a way to reduce monthly costs is absolutely vital.
What’s happening with house prices? Wherever we look, we find different experts making different predictions. Even more confusing, those experts change their minds as the housing market changes – if you find a company predicting a 5% fall in prices in 2008, there’s a fair chance that back in December they were talking about a year of ‘flat’ prices.
Still more confusing, it seems there’s no definite agreement on where we stand today!
If you can’t keep up with your mortgage payments and your lender doesn’t think you’ll be able to sort out your finances in a reasonable timeframe, they may suggest you sell your property. If you don’t agree, they may feel they have to start repossession proceedings – starting with a default notice...
Read More...Note: This is the second part of a two-part blog. If you’ve not read the first half, we’d recommend you start by clicking here. [link to Blog 38]
Suspended Possession Order
As the name says, this is a Possession Order which the Court has granted – but suspended. In other words, it won’t be enforced unless you fail to stick to the repayment terms laid down in the Order.
When it comes to mortgages, there’s a big difference between mortgage debt and mortgage arrears.
Mortgage Debt: Anyone with a mortgage owes money to the lender. That’s how mortgages work: you borrow money to buy the property, then repay it over (often) 20-30 years. As long as you can afford the repayments, this isn’t a problem. It’s very similar to paying rent – except one day, there’ll be nothing more to pay…
If you’re a homeowner and you owe less on your house than it’s worth, you have what is known as ‘equity’. A simple equation:
equity equals value of home minus amount you owe in mortgages / secured loans
If you’re thinking about repaying a loan early, it’s important to understand how an ‘early repayment charge’ works.
When you borrow money, the lender anticipates earning interest over a fixed period of time. Many lenders will demand an early repayment charge (or ‘redemption penalty’) if you pay a loan back early, because they won’t be getting as much money back in interest as they originally anticipated.
On 9 May, Alistair Darling (Chancellor of the Exchequer) and Caroline Flint (Housing Minister) announced that the Government would provide £10 million of funding to improve the financial support and debt advice that’s available to homeowners having trouble paying their mortgages.
The funding will provide people who might lose their home with ‘expanded access’ to free legal representation in the county courts. It will also pay for specialist debt advice training for staff in charity and local authority organisations, and a new comprehensive debt advice service from the National Homelessness Advice Service.
Our initial advice on your best financial solution is free. Fees payable where continuing services are provided. Calls may be recorded for training and quality purposes.
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