Debt charity warns of rise in mortgage arrears

National debt charity Consumer Credit Counselling Service (CCCS) has warned today that many homeowners risk falling into mortgage arrears this year due to budget pressures such as high inflation and wage freezes.

It predicts that a rise in interest rates, which will lead to higher monthly mortgage payments for thousands of borrowers, will see many people struggling to keep on top of their mortgage payments.

The charity said that last year it counselled 90,000 homeowners – owing an average of £30,160 in unsecured debt on top of their mortgage.  Low mortgage rates have helped borrowers over the last two years and the CCCS said that calls to its mortgage counselling centre were down almost 70 percent in 2010.  However it predicts that calls will rise again once interest rates are lifted from their current all-time low.

The charity also voiced its concerns that struggling homeowners are using credit cards to pay their mortgages.  People in this situation could seriously struggle to pay their mortgage if interest rates this year.

Also out today is a report from Financial Services firm Friends Life which says that 59% of middle income households would be unable to provide for themselves and their families for longer than six months if they lost their main source of income.

It said that since the recession many people are now committed to reducing their debt to help them survive the ongoing effect of the economic downturn.

Tips for keeping your finances under control

Think about fixing your mortgage

If you’re concerned about being able to afford your mortgage if interest rates rise then consider a fixed rate deal.  With a fixed rate, your monthly payments won’t change so it’s easier to budget.  To see how a rise in interest rates would affect you and your mortgage, try our rate change calculator.

Give you finances a spring clean

Review your mortgage deal and your other regular outgoings and see if you can reduce the amount you pay out each month.  Check things like your credit card, broadband, mobile phone and utilities and make sure you’re not paying more than you need to.

Protection

It’s important to have a financial safety net in place to protect you and your family if you were unable to work long-term due to illness or redundancy.  Visit our website for more information on the ways that you can protect yourself and your income.

Seek advice

If problems arise, don’t ignore them.  If you’re finding it hard to afford your mortgage payments, speak to your lender and if you’re struggling to cope with your debts in general then think about approaching someone like the Consumer Credit Counselling Service for help and advice.

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