Central london Real Estate and Business

In among all the bad news for homeowners on house prices comes a sliver of good: the government has given £10million in an attempt to slow down the rate of repossessions.

The cash will mostly be used to pay for financial advice services and one-to-one debt counselling by organisations such as Citizen Advice, while those who end up in court fighting repossession will have access to free legal advice.

Repossessions rose by nine per cent on the previous quarter in the first three months of 2008 and were 17 per cent higher than at the same time last year - although they are only occuring at a third of the rate they were in the early 1990s.
Nonetheless, more and more people appear to be concerned about their ability to pay. Citizens Advice says the number of enquiries from people suffering difficulties with mortgage arrears went up by more than a third in the first two months of the year, compared with the same period in 2007.

Fixing your mortgage

One of the main problems for homeowners is the credit crunch in the banking industry means it's more difficult to find an affordable mortgage when fixed-rate deals come to an end. Many lenders have less money to devote to mortgages and are becoming more choosy about who they lend to. The loans themselves have generally become more expensive, too.
Michael Coogan, general director of the Council of Mortgage Lenders, says: 'Most people who suffer payment difficulties can get out of trouble by taking good advice, prioritising their debts and communicating with their lender early.
Lenders are commited to keeping the number of repossessions as low as possible, even in more challenging economic conditions. Encouraging borrowers to take action early by seeking advice can make a big difference. Lenders are working hard to ensure they contact borrowers who may be at risk of seeing their payments go up, to enable them to plan ahead.'
Chris Cummings, general director of the Association of Independent Financial Advisers (AIFA) and the Association of Mortgage Intermediares (AMI), adds: 'Advisers can help consumers adopt better financial management and better all-round budgeting. They can also help manage debt through talking to the lender, finding an alternative mortgage deal or an alternative financial solution.
Some lenders are helping by sharing with intermediates information on homeowners who are getting into arrears. Intermediaries can then advice sonsumers and help prevent them getting into more serious difficulties.'

Cost effective

There are also mortgage deals around that could help keep cost under control. HSBC, for example, has extended applications for its 'rate matcher' mortgage until the end of June.
The deal matches two-year fized-rate deals as low as 4.54 per cent for a further two years, which allows homeowners to stabilise their finances. The mortgage is open to new and existing customers whose fixed-rate mortgages are coming to an end by August 31 but the is limited to 80 per cent loan-to-value (LTV) and to a maximum of £2500,000.
For borrowers who don't know which way to turn, Cheltenham & Gloucester has an 'all-weather' tracker mortgage allowing them to follow the rates down while letting them jump free-free into a fixed-rate deal at any point.
All-weather mortgage customers receive an econimic consultation from trained mortgage adviser to explain the impact of base rate changes on their monthly payments and help them decide on the highest base rate level within their comfort zone.
The two-year deal currently has an interest rate of 5.99 per-cent, which is 0.99 per cent above the Bank of England base rate. The application fee, however, is just £99.