Monday 5th of October 2009
Homeowners struggling to find their monthly mortgage repayments may wish to turn to individual voluntary arrangement (IVA) to try to improve their financial position.
Despite house prices rising 0.9 per cent in September, values are still well below the 2007 peak.
In the current period of economic downturn, homeowners may worry about their debts becoming uncontrollable.
In this situation secured loans, such as mortgages, would likely become a priority for many - meaning unsecured debts, such as credit card bills, could be put to one side and left to build.
An IVA cannot be used to help with paying back a mortgage, but it could restructure your unsecured debt repayments.
IVAs work by freezing interest rates with creditors and putting a manageable repayment plan into action.
This could free up cash and result in the secured loans - such as a mortgage - being easier to fund each month.
Brigid O’Leary, senior economist for the Royal Institution of Chartered Surveyors, said: "House prices are still expensive compared to average earnings.
"Looking ahead, high - and still rising - unemployment plus any future increases in mortgage interest rates will weigh on the outlook for house prices."
By Rachel Powell
- House price rise 'may not indicate recovery'
- Equity release 'needs to be increased'
- Need for IVA help could increase as expert predicts reduction in lending
- Government announces 'breathing space' for those needing IVA help
- Lack of subprime lending creating need for IVA help, expert suggests
- Information on IVAs could put an end to dwindling coffers
