Ask for a helping hand

Mon, Feb 18, 2008

Rising gas and electricity bills could be the final straw for cash strapped homeowners as they struggle to meet mortgage payments.

Repossessions could top 123 a day, warns the Royal Institution of Chartered Surveyors, as people struggle to meet monthly outgoings.

It means it's crucial to budget properly and if you think you may start to struggle contact your lender to let them know. You may be able to take a short payment holiday.

Or you could remortgage to a longer-term which would reduce the monthly bill but increase the amount you would eventually have to pay back. Switching to an interest only mortgage would also cut the monthly charge but you'd need to find the finance to pay the mortgage at the end of the term.

You could also look into switching to a lower fixed or discount rate. Another option is to take out a new loan to pay off more expensive credit-card debts or overdrafts.

Halifax Unsecured Personal Loans said this week the number of debt consolidation loans taken out rose in January. "People are transferring debt from more expensive loans and store cards," said Halifax's Neil Chandler.

Using an unsecured personal loan for debt consolidation means you end up with just one fixed monthly payment for all your debts.

Another option - if you have a very clean credit record - is to take out a 0 per cent deal on a credit card. A borrower needing £10,000 could save £1,054 over a four-year term by using a series of 0 per cent balance transfers.

"Lenders have raised personal loan rates sharply in the past six months, making most loans significantly more expensive," claims Chris Gilchrist of everyInvestor.co.uk

"But credit card companies continue to offer lengthy 0 per cent balance transfers, and even with balance transfer fees, this still works out well below the interest you'd pay with a loan."

However, only those with the discipline to pay off their plastic and not run up further debts should contemplate such a tactic.

Source: http://www.mirror.co.uk/news/money/mirrormoney/