Wednesday 18th of November 2009
The proportion of people choosing a fixed-rate mortgage is declining rapidly, according to independent mortgage experts John Charcol, so an increasing number of people may wish to seek individual voluntary arrangement (IVA) advice.
Just 26 per cent of prospective homeowners taking out a mortgage in October opted for a fixed-rate deal, compared with an all-time high of 83.1 per cent just four months ago.
In the short term, while the base rate remains at a historic low of 0.5 per cent, these people can take advantage of having to pay less interest on their mortgage than those with fixed arrangements.
But in future, when rates inevitably increase, those on tracker-style deals could be strapped for cash, jeopardising their ability to repay unsecured debt such as personal loans and credit cards.
One way to avoid such a scenario could be to take IVA advice now in a bid to pay off all unsecured debts which could currently be hanging around a household’s neck, thus leaving families in a stronger position to deal with mortgage interest repayment rises in the future.
An IVA could help to remove unsecured debts by freezing interest rates and restructuring repayments so they are more affordable to a debtor.
By Kimberley Parsons
- 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
- IVA repayments could be under threat from unauthorised overdraft charges
