As the economic recession continues, losing your job and as a result, your home is the nightmare uppermost in many people s minds. But if you are worried that redundancy could be followed by your home being repossessed, there have been two positive developments.
Firstly the Royal Bank of Scotland has said that it will not commence legal action to repossess homes for six months and other mortgage lenders have accepted a moratorium of at least three months in response to the Government s request.
Given the time it takes to get a repossession order from the court and the fact that these orders are usually not actioned straight away, it can take as long as 9 to 12 months after first falling into arrears before borrowers are actually forced out of their homes. This gives homeowners a lot of time to sort out an alternative solution.
Second, the Government has extended its range of initiatives and benefits aimed at allowing people to stay in their homes. For example, the state benefit that pays all or some of your mortgage interest that has arisen. Homeowners are now able to receive help within three months of losing their job, whereas previously they had to wait a full 9 months and the limits on the amount that will be paid has been increased.
So what do you have to do if you lose your job? Here s a guide to dealing you re your mortgage arrears and what you can do to avoid losing your home. It s important to start off with the fact that redundancy does not automatically lead to repossession. It really depends on the state of your finances and how you deal with your financial problem.
Your first lines of defence should be any pay in lieu of notice, your redundancy money and your own rainy day savings. Financial experts always recommend that you keep sufficient money aside to tide you over for 3 to 6 months in a savings account you can access easily.
If you have been prudent and have bought unemployment insurance (which is often bundled with accident and sickness cover), check whether you can make a claim and how long you have to wait. There is often a delaying period of 1, 2 or 3 months before you can make a claim. You also need to look into the state benefits which are available. These can be a complex area but your local Citizens Advice Centre, can guide you through the maze and help you make a claim.
You can also claim support for mortgage interest , if you qualify for certain income related benefits. This benefit is designed to pay some of your mortgage interest. It assumes that you pay interest at 6.08 per cent no matter what you actually pay and you are eligible for help on the interest on the first 200,000 pounds of your mortgage. The Government makes these payments directly to your mortgage lender. And the delay between making a claim which you can do as soon as you lose your job and receiving the first payment is 13 weeks.
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