Mortgage rescue claim is rejected

A woman was rejected by the government’s mortgage rescue scheme despite being the “perfect candidate”, according to financial advisers.

Donna Parsons was told that under the Mortgage Rescue Scheme the government would buy her home, pay off her debt and rent her home back to her.

But despite showing four bank letters threatening repossession she had not been sent one from her mortgage lender.

“There is just no flexibility, it must be notice from the lender,” she said.

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UK homeowners pay off £8bn of mortgage debt

British homeowners are benefiting from the cuts in interest rates by paying off their mortgages in record amounts, figures showed today.

A huge £8bn of mortgage debt was repaid in the fourth quarter of last year, according to Bank of England figures, as Britons with tracker mortgages responded to the sharp fall in interest repayments by pumping the spare cash into paying off their capital.

It follows figures earlier this week showing record inflows of savings into building societies and data last week showing a rebound in the proportion of income people are saving, as those in employment take the opportunity to pay off debt and prepare for leaner times as the country sinks into recession.

Read more: UK homeowners pay off £8bn of mortgage debt

Debt warning over Mortgage Support Scheme

The government’s mortgage rescue plans may provide breathing space but could significantly increase overall debt and lead to negative equity, experts have warned.

The new Homeowner Mortgage Support Scheme, announced yesterday by Gordon Brown after the Queen’s Speech, will allow homeowners facing a sudden loss of income to cut their mortgage repayments.

This will be done by the borrower deferring a proportion of their interest payments on their mortgage for up to two years – but deferred payments will be rolled back into the total still owed.

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Debt management - helping avoid mortgage repossession

Figures from the Council of Mortgage Lenders (CML) suggest that mortgagors around the UK are finding it harder to manage their debts. At the end of June 2008, 1.33% of mortgages were at least three months in arrears. Three months later, this figure had risen to 1.44% - and by the end of 2008, 1.57% (182,600 mortgages) were in this group.

The basic fact is simple: people miss payments when they don’t have enough money to pay all their bills. However, the ones they’re missing aren’t necessarily the ones that are causing trouble. Many people find they can’t make their mortgage payments because payments to their unsecured debts are taking up too much of their income. This is something debt management can help with.

Debt management - making money available for secured debts

When someone enters a Gregory Pennington debt management plan, we talk to their unsecured lenders, asking them to accept lower monthly payments and, where possible, to freeze interest and / or waive charges.

Basically, we tell them how much our client can afford to pay them per month once they’ve taken into account what they need for their unavoidable expenses, from mortgage payments to food and utility bills. Lenders will normally understand that mortgage payments must take priority over (for example) credit card payments: most would rather accept lower payments for a while than see the borrower lose their home.

Of course, making reduced payments will mean it’ll take longer to pay off those debts - and making smaller monthly payments than originally agreed will have an impact on a borrower’s credit rating, which can make credit more expensive and / or difficult to obtain for a while. Even so, the consequences of making lower payments to unsecured debts are less serious than the consequences of missing payments to a mortgage / secured loan.

Debt management - negotiating with secured lenders

When the situation calls for it, our debt management experts will also talk to secured lenders. If one of our debt management clients is facing mortgage arrears, for example, we can talk to their mortgage provider and try to find a solution that suits both sides - a repayment plan that’ll help the borrower pay off the arrears at a realistic, affordable rate.

Are you struggling to pay your mortgage because of your debts? Click here for debt help from Gregory Pennington.

Guardian launches debt management helpline

Guardian Debt Management has launched a free and confidential arrears helpline intended to arm UK homeowners with all the necessary advice and tools to help them through their current financial situation.

Debt Management at Gregory Pennington

Debt

What should you do if you fall into arrears with your mortgage, or generally need help with your debts?

The below list features some of the people you can call to get help with debt.

• Citizens Advice Bureau - The CAB are a first port of call for many people. They may be able to give you advice on your options.
• Think Money - Think Money can provide you with help on mortgages, remortgages and debt.
• Gregory Pennington - Reputable debt management company who provide various debt solutions.
• Debt Advisers Direct - Debt Advisers Direct specialise in debt consolidation and debt management.
• Shelter - Shelter are a housing and homelessness charity.
• Your local council - Your local council may be able to help with housing and debt related problems.

Debt Consolidation

If you have loans, credit cards or store cards with different companies you can consolidate all these debts, making them much easier to pay off.

Benefits of a debt consolidation mortgage:

• Remortgage and release the cash tied up in your property
• Consolidate existing loans, credit cards & store cards
• One lower affordable amount to pay each month

If you have equity in your property you could remortgage and release cash to pay off existing debts. A debt consolidation mortgage can reduce your monthly outgoings without damaging your credit rating.

Click here to find out if you can get a debt consolidation mortgage.

BoE failed to spot debt danger

Bank of England deputy governor Sir John Gieve has admitted that the Bank did not understand the severity of the problems leading to the economic crisis.

Speaking to the BBC, Gieve said that the Bank of England was aware that “crazy borrowing” was taking place, and that the rise in house prices was unsustainable.

But he added that the Bank did not think the problem was as serious as it has turned out to be.

The financial crisis was largely caused by relaxed lending criteria from banks and other financial institutions, and many borrowers eventually found they were unable to repay their debts.

A spokesperson for debt management company Gregory Pennington said: “The numbers of people falling into debt have risen noticeably over the past few years, and since debt problems tend to filter through over a long period of time, it’s possible that the numbers will continue to increase throughout 2009.

“We advise anyone who finds themselves struggling with debt to speak to an expert debt adviser before the problem grows out of control.”

Rising cost of Living Forces 4.4 Million1 Mums Back to Work

Research published today from Scottish Widows, reveals that the cost of running a home means that almost half (47%) of households are having to rely on more than one breadwinner to maintain a comfortable standard of living. This increases when it comes to those with dependent children, 61% of households with children are reliant on two incomes, forcing both parents out to work.

(PRWEB) December 14, 2008 — Research published today from Scottish Widows, reveals that the cost of running a home means that almost half (47%) of households are having to rely on more than one breadwinner to maintain a comfortable standard of living. This increases when it comes to those with dependent children, 61% of households with children are reliant on two incomes, forcing both parents out to work.

This reliance on two incomes to run the family home means millions of households are leaving themselves at risk of being unable to survive financially if one of the bread winners become unable to work as a result of critical illness, death, disability or due to an accident. If households do not have sufficient protection for any of these circumstances, many would be left struggling.

For many households, living with debt has become an acceptable situation. While the country was enjoying economic boom this was sustainable but now everyone has to tighten their belts more than ever. People need to make sure they protect themselves financially so if they do get into difficulties they have the vital back up in place to look after their families and loved ones.

Commenting on the findings, Scottish Widows’ protection market director, Richard Jones says: “The reliance on two incomes is the only way to maintain a decent standard of living for many families and with the rising cost of living this isn’t likely to ease off any time soon. If something should affect the health of either earner that prevents them from working then there may not be enough money to run the home. This means families are effectively doubling their risk; therefore they need to ensure they are protected against unforeseen circumstances which could leave them reliant on just one income. Families just don’t have the luxury anymore of being able to have one parent at home to take care of the children and the running of the household if they want to maintain the lifestyle that they have become accustomed to.”

The reliance on debt is also increased in households with children, the average household with dependent children has £88,500 still outstanding on their mortgage compared to an average of £77,500 for those with no dependent children. When it comes to short term debt, the average household with dependent children has carried over £9359 over the last 3 months compared to an average of £7223 for those with no dependant children.

Commenting further on the findings, Richard Jones says: “For many households, living with debt has become an acceptable situation. While the country was enjoying economic boom this was sustainable but now everyone has to tighten their belts more than ever. People need to make sure they protect themselves financially so if they do get into difficulties they have the vital back up in place to look after their families and loved ones.”

Payplan launches free arrears service

Payplan has launched a specialist debt management scheme for mortgage lenders.