New research from consumer watchdog which shows that half of the country is worried about mortgage rates and a quarter (26%) are concerned about facing repossession.
The findings were revealed in the Quarterly Consumer Report and show that one in four people are worried about their homes being repossessed as many struggle to make payments.
Not only are some at risk of repossession, but those in the 30-49 age group are considered ‘mortgage prisoners’ trapped in their current mortgage deal and unable to switch when rates increase.
“The housing market is failing not just one but two generations of consumers, with many mortgage prisoners trapped on their current deal and young people excluded from the housing market altogether,” Which? executive director Richard Lloyd said.
Additional figures from debt charity Credit Action show that, on average, a property is repossessed every 15 minutes and 30 seconds.
The average household debt in the UK, including mortgages, was an eye-watering £53,706 in August. The average outstanding mortgage for the 11.2million UK households that have mortgage debt stood at £111,793 in August.
The figures also show that 93 properties, on average, are repossessed every day based on Q2 of 2012.
According to housing charity Shelter, as a homeowner you can only be evicted if your lender or freeholder can prove there is a legal reason to evict you and the correct procedure has been followed.
Repossessions don’t happen automatically and there are a number of ways you could try to prevent the process at any stage. It’s important that you know your rights.
Top tips to avoid repossession
If you are one of the thousands of UK homeowners who could face repossession, here are a few useful tips and hints to help get you out of the situation.
1. Talk to your lender
One of the most important things you could do if you are facing financial difficulty is talk to your lender. Speak to them as soon as possible and explain your situation as you might be able to negotiate terms which allow you to keep your property.
It would be advisable to see if the lender will allow you to take a payment holiday. This is an agreed period of time where the borrower would temporarily stop making payments towards his or her mortgage.
Whether you are eligible to take a payment holiday and for how long largely depends on your individual circumstances and the mortgage deal you have. For example, some flexible mortgages let you take a payment holiday any time and you might not need to explain why to your lenders.
If you are struggling to make payments on your mortgage you could talk to your lender about the arrears on your mortgage loan. This is known as capitalising on your arrears.
When discussing issues with your lender, ask if you could pay off your arrears in installments. Your lender might agree your mortgage term, which will allow you to make payments over a longer period of time and reduce your monthly repayments.
2. Rent out the property
If you have this option, you could rent out the property and rent out somewhere cheaper. It could be advisable to check with your lender if this is a viable option for you as there is likely to be a clause which prevents you from doing this unless you get permission from your lender.
If you are denied this, it could be worth renting out a room in your property for an extra source of income to help pay the bills.
3. Change your mortgage type
One way to avoid repossession is by changing your mortgage type. Switching to a more cost effective mortgage could be better for your situation.
Of course it would be advisable to only switch mortgages if you are able to manage the new repayment scheme.