With the popularity of debt consolidation loans, it only makes sense to take advantage of the ability to save on the interest rate as well as eliminate the likelihood that those in default on their mortgages could be evicted. By taking advantage of the debt consolidation loans that exist, those with decent credit can renegotiate their interest rates as well as buy themselves some breathing room in order to make up for lost time.

Terry Balfour of IVA stated,  “From what we are told by the IPs we work with and the people in serious debt who call us for help, the fall-out from the current financial climate will be felt for quite some time to come.

“You can’t jam the brakes on the runaway train of borrowing and spending that the UK has been riding for the past few years without serious damage occurring – and that’s what is happening now.

“The most important thing to remember is that no problem is insurmountable and the industry that has been built up around the UK debt problem is there to help.”

“We are living through a period of inflating prices and mortgages are no exception,” explained Francis Ghiloni, mform’s marketing and business development director.

“The Bank of England can cut rates but as we have seen over the past year there is no guarantee this will translate into a lower true cost of mortgages at least in the short term.”

“With rates creeping steadily upwards the advice to borrowers looking for a new deal is clear. Look to minimise your exposure to rate rises by ranking your mortgage on the true cost taking into account repayments as well as all fees,”

Sean Gardner, Director of MoneyExpert.com, commented: “With close to forty per cent of those who owe money worried about their ability to stay on top of their debts, these latest figures add up to a collective cry for help as Britain’s enormous debt mountain looms larger than ever.”

“There are many ways to get your finances under control, from getting a debt consolidation loan to just juggling your borrowing onto cheaper products. But the important thing is to work out a repayment plan and not bury your head in the sand.”

“It’s alarming to see that while almost the entire UK population think they are on top of their finances, many aren’t,” Jim Hodgkins, Managing Director for CreditExpert.co.uk, said.

“Home repossession is absolutely the last resort for banks” defended BBA chief executive Angela Knight. “Our high street lenders are actively helping more people stay in their homes in these difficult times.

“We recognise that, with rising food and fuel costs, people may be finding money more difficult to manage and we urge anyone who is worried about meeting monthly mortgage payments to get in touch with their lender as quickly as possible. The problem won’t go away on it’s own but banks are well placed to help customers plan their finances to keep the whole show on the road.”

“It’s a very serious situation when you have people turning to a short-term solution to fund a long-term product.” said Tim Moss, head of loans and debt at moneysupermarket.com. “Having a roof over your head has to be your top priority but to be funding that with a loan you might default on or with a credit card that will eventually charge you interest of over 15 per cent isn’t the solution in the long term.”

Andrew Montlake, of broker Cobalt Capital. “While much has been made of the mortgage malaise and the difficulties of remortgaging for some, the reality is that quality applicants should not have much of an issue and still have 1,000 or so products to choose from.”

“Let’s not pretend that the landscape hasn’t altered dramatically,” says David Hollingworth, of broker London & Country. “Although you don’t say what your salary is, even at the reduced multiple of 5.5 times income, it could prove difficult to find a lender keen to lend that amount.”

Martin Ellis, chief economist of Halifax, said: “House prices have declined by 6.1 per cent over the past year. Nonetheless, the average UK price remains slightly higher than two years’ ago and is appreciably stronger than three or four years ago.”
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Drew Wotherspoon of John Charcol stated, “Borrowers with large mortgages have found themselves ostracised of late, with lenders viewing them with some degree of distain. Our new exclusives, launching this week, will now allow borrowers with mortgages up to £5 million to obtain a competitive rate. The range starts with a rate of 4.99%, but does come with a fee of 3%. However, this product has no Early Repayment Charges and will certainly suit borrowers who want to keep their payments low and their options open. Borrowers should contact Charcol for full details on this and the entire range.”

“If you want to protect against a potential 1% rise in your rate, cover effectively costs around £55 per month per £100,000 insured for an interest only mortgage, putting another 0.66% on the rate you pay each year. As such, it is a really about taking a decision on future rate movements. I would strongly advise people to seek professional help before deciding if this is the right route for them.”

“In any housing market downturn, it is important to reduce your mortgage if you possibly can,” says Melanie Bien, a director of independent mortgage broker Savills Private Finance. “If property prices fall, the threat of negative equity – where your mortgage is greater than the value of your home – grows. By reducing your mortgage, you reduce this risk.”

David Hollingworth of London & Country said, “If a bonus is an integral part of your income – and you will need to draw on that money at some point – you can still benefit by offsetting it, while retaining the ability to withdraw it when you need.”

But Ray Boulger, of John Charcol, says: ‘I’m not convinced base rate will rise. Even if it does, it may go up only by a quarter of a point, and the Bank of England will have to cut it again next year. Two-year fixes are taking account of bigger rises, while the price of trackers hasn’t changed. Unless you absolutely need the security of a fix then trackers look better value.’

Richard Morea at broker London & Country adds: “Lower house prices will mean that the value of your existing share in your property will also have fallen.”

Rob Clifford at broker Mortgageforce, states: “Remember that house-price inflation is likely to return and in the medium-to-long term, people will still see their property value increase.”