Property Rescue Blog

According to the most recent BBC report, over four fifths of mortgage lenders believe that there will be 15% rise in home repossessions in 2008. The CML recently reported that in 2007, over 30,000 homes were repossessed compared to 22,000 in 2006.

Repossession is becoming a massive problem in the UK. Defaulted mortgages are contributing to the growing credit crisis that has proliferated to British shores from across the pond. Many people are finding themselves coming to the end of cheap fixed rate loans and the reality of paying standard variable rates is leaving many with a dire financial outlook. The Bank of England is attempting to prop up the housing market with interest rate cuts, but at best this will keep the market static.

The biggest issue facing people with threat of repossession is the devastating effect that it has on their financial outlook. A completed repossession order is severely detrimental to a persons credit rating. The knock on effect of this is that it prohibits affected homeowners from achieving anything close to reasonable interest rates from lenders for future mortgages. As a result, sub-prime mortgages become prospective homeowners only option. The pitfalls of sub prime mortgages have been well documented, as shown with the eventual run on Northern Rock after the markets lost all trust in them. Interest rates of over 11% are widespread in this sector and these mortgages are not to be advised.

Sell and rent back schemes provide an option to stop repossession. Although homes are bought at a discount, the long term benefits of preserving credit ratings could prove financially astute in the subsequent years. Once the debtors are assuaged and your home is secured, you may find yourself in a more sustainable financial position. A buy back option written into the new tenancy agreement will then allow you to re-purchase your house at the rate of the new mortgage.

Any financial decisions made to deal with debt should always take into account future situations. Seeking a quick fix, for example with a debt consolidation loan, will often leave you in a worse financial situation after all the repayments are made. Seek advice from your local Citizens Advice Bureau as to the best course of action before making any major decision on how to repair your finances.