As the cost of living increases and family incomes stagnate or fall, we consider the options for saving your house if you are unable to pay your mortgage.
The current situation for homeowners is not an easy one.
Essential living expenses such as petrol and energy are increasing and with the government cuts gradually starting to take effect, many family incomes are falling or likely to do so.
Given this, many people are finding themselves in a position where they cannot afford to keep up with their mortgage payments and risk the repossession of their property.
This is especially so if they have other debts such as credit cards, catalogues and personal loan payments to pay.
We consider the options if you find yourself in this position.
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Cutting back may not be an option
In this situation it is easy to simply say that you must review what you spend and cut back.
At this time of year, newspapers and magazines are full of money saving tips aimed at helping you budget.
Of course this is important. However, if you are truly struggling and running out of money before the end of the month, simply trying to spend less will not be enough to make a difference.
The answer is therefore to free up cash by reducing the amounts you are paying to your other unsecured creditors.
Options to reduce unsecured debt payments
Clearly you will not have available funds to simply pay off chunks of your unsecured debt to bring the balances and therefore your monthly payments down.
It is therefore extremely common to protect your mortgage payments using a debt management plan (DMP) or individual voluntary arrangement (IVA).
Both allow you to reduce the payments you make each month to your unsecured debts leaving you enough money to pay for your reasonable living expenses and mortgage payments.
The option you choose will depend on your circumstances as both have various advantages and disadvantages. It is therefore important to understand all of these before making your decision.
Do not bury your head in the sand
The most important thing to do if you are facing a debt problem, particularly if you are at risk of getting into mortgage arrears, is not to ignore the problem and hope it goes away.
If you are struggling now, your ability to maintain your mortgage payments is actually likely to get worse in 2011.
Many incomes will be under pressure as the government spending cuts affect more and more public and private employers. Jobs may not be lost but you can be sure that overtime and bonuses will be cut.
VAT is also increasing in Jan adding an additional 2.5 percent to the cost of many living expenses items.
However, the real issue is the possibility of rising interest rates which will push up the cost of mortgage payments particularly if you are on a standard variable rate.
Given that the cost of living is rising so fast, many experts predict that such an interest rate increase could happen as early as April 2011.
Against this background, it is vital that you take action as soon as possible to free up cash for your mortgage. If you catch a debt problem early and implement the right solution, you can avoid getting into mortgage arrears and protect your home.