Homeowners must prioritise mortgage payments

March 1, 2011 - PRLog -- Following Mervyn King’s prediction that interest rates may rise three times before the end of the year, Atlantic is warning homeowners to put mortgages at the top of the list of payment priorities ahead of unsecured debts for credit and store cards.

Kevin Still, Atlantic Director said: “With annual inflation hitting 4% in January, double the target, it is likely that many indebted UK homeowners will face a double whammy of increased household expenditure and rising mortgage repayments.

“For many households, with budgets already stretched, the temptation will be to focus on reducing payments on unsecured borrowing, like store and credit card debts, paying back the minimum. All the time the debt is increasing with interest charges. Whilst these debts must not be ignored, when push comes to shove, meeting increased mortgage repayments must be the first priority ahead of these unsecured debts. There can be nothing more devastating than losing your home and that’s a very real risk when you fall behind on mortgage payments.

“Sadly we have seen many cases of clients starting a Debt Management Plan (DMP) or an IVA who hadn’t made the distinction between priority and non-priority payments, putting their property at risk.

A Debt Management Plan from a debt solutions company such as Atlantic will work out which payments are prioritised and which can be negotiated. Priority debts, such as mortgage, secured loans, rent, council tax and utility bills must be paid first and Atlantic makes allowances for these in the client’s monthly budget and statement of affairs. Atlantic also negotiates a debt repayment plan for unsecured debts which are paid once the priority debts have been settled each month.

www.griffinandking.co.uk

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Griffin and King are a leading firm of Insolvency Practitioners within the West Midlands with offices covering Dorset, Hampshire, Shropshire and Mid Wales. We are licensed by The Institute of Chartered Accountants in England & Wales