Don't Risk Repossession - Prioritise Mortgage Payments

Atlantic Financial Management advises consumers to take control of debts

With news from the Council of Mortgage Lenders (CML) that more than 9,000 properties were repossessed in the first three months of 2011, up 15% on the previous quarter, Atlantic Financial Management is warning consumers to continue to prioritise their mortgage payments. Kevin Still, Director of DEMSA member Atlantic Financial Management says, "Families may have expected things to get easier now that the economy is officially growing. However, with The Bank of England governor warning this week of potential interest rate rises, on top of recent benefit cuts, VAT increases, ongoing pay freezes and rising living costs, times are tougher than ever and many middle income families facing a new age of austerity are missing mortgage payments and putting their property at risk."

"However, mortgage repayments must be a priority payment ahead of unsecured debts such as credit card debt. There can be little more devastating than losing your home and that's a very real risk when you fall behind on mortgage payments, despite forbearance being offered by the major lenders. At the end of March, the number of mortgages with arrears equivalent to 2.5% or more of the outstanding balance showed an improvement to 166,900, slightly lower than the end of 2010 and an 11% improvement on the 187,300 a year earlier. This is encouraging, as it shows that many struggling homeowners have economised or learnt to prioritise payment."

" ... They hadn't made the distinction between priority and non-priority payments, putting their property at risk. ..."

There were 33,900 loans for re-mortgage, worth £4.1 billion, advanced in March, up 16% by volume and 17% by value compared to February and up 17% by volume and 13% by value compared with March 2010. Those that can reduce mortgage costs before rates start to rise are doing so, but for many they don't meet tough lending criteria.

"Around 15% of the clients starting a Debt Management Plan (DMP) have arrears on their mortgage when they come to us. In many instances this is because they hadn't made the distinction between priority and non-priority payments, putting their property at risk."

"... Small debt to increase rapidly and become a much larger problem ..."

A Debt Management Plan from a debt solutions company such as Atlantic will work out which payments are prioritised and which can be negotiated. Priority debts, such as mortgage, secured loans, rent, council tax and utility bills must be paid first and Atlantic makes allowances for these in the client's monthly budget and statement of affairs. Atlantic also negotiates a debt repayment plan for unsecured debts which are paid once the priority debts have been settled each month.

"For those in financial hardship," continues Kevin Still, "Managing existing debts and ensuring payments on secured loans such as mortgages are not missed is even more important than cutting future spending. Interest charges and late fees on loans and credit cards can cause a relatively small debt to increase rapidly and become a much larger problem. However, as more Brits than ever are finding out the hard way, it gets much more serious if mortgage payments are missed."

To find out more about Atlantic Financial Management contact us or call 0845 0 30 30 30