Living in a home without a parachute?
Lucy Haughey of the Plan B Partnership explains how to ensure your home isn't repossessed
April 24, 2013
A recent YouGov survey for housing charity Shelter, found 35% of home owners and private tenants surveyed admitted they would only be able to sustain their housing costs for a month or less if they lost their job and that rather frighteningly this would mainly be funded by savings. Of this group, almost half were parents with children under 16 years of age living in the home with them.
So what can you do to protect yourself from plummeting into homelessness if you think you are one of the 8.6million with no “Plan B”?
- Don’t be afraid of insurance. It genuinely does work as long as it is affordable for you and applied to your specific risks. Insurance of any type really should be bought from a regulated insurance advisor
- Make savings a priority. A good rule of thumb is 6 months worth of mortgage payments put away for that “rainy day”.
- The bank you have your mortgage with will generally play hard ball and start proceedings to take your home from you after around 6 months OR 6 consecutive missed payments of your mortgage loan. They will look more favorably on you if you have stayed in touch with them and made efforts to pay at least some of the payments. Remember if you are unemployed you can pay the interest on your mortgage by applying for mortgage relief benefit BUT it can take several weeks for your application to be processed and approved so apply for it as soon as you are officially unemployed!
- If you are having issues paying your mortgage but have not done so in the past, what exactly is the issue? Has the rate gone up and become unmanageable? Have you had a period out of work or some personal or debt issues and missed some payments? Are you nearing the end of a sweet deal and worried the rate you are about to be put on is too high? Is your partner moving out and you think you can’t afford the loss of income and to manage your housing costs?
- The answer to all these issues is to cut your cloth accordingly, create and use savings where you need to as your home is an “essential cost”, try and budget to reduce other expenses, seek independent mortgage advice, make sure you have EXACTLY the right insurances for your job, health and family circumstances and have a mortgage review around 3 weeks before your mortgage deal reaches its end.
- You can save huge amounts by re-mortgaging when your deal comes to an end. Make sure you shop around and find the best deal for you. If you don’t you will normally be placed on your current bank’s standard variable rate which is usually more expensive.
Director- The Plan B Partnership