Being out of work will obviously put pressure on people's ability to pay their mortgage. However if they have up to six months before lenders start to push for repossession, then they have a good chance of being able to find a new job and get things back on track.
Braintree, Essex (PRWEB) December 3, 2008
A more constructive approach to repossession from high street banks will make a significant difference as the country begins to look ahead to a very tough 2009.
A longstanding commentator on payment protection insurance (PPI), Sara-Ann Burgess, director at specialist firm Burgesses, said she was delighted to see Royal Bank of Scotland (RBS) extend the length of time before it would seek to initiate repossession proceedings against borrowers in arrears.
However she also said it was important for consumers to make protection plans of their own and not to rely on goodwill from their lenders to see them through potential problems.
Currently the industry standard is for lenders to wait for three months until they push for repossession. However RBS has said it will now wait for 6 months before taking action against defaulting borrowers.
"This will help the tens of thousands of people who are going to lose their jobs in the coming months and many are likely to struggle with their mortgage," said Burgess.
For those who ended up out of work, Burgess said it was essential for them to get as much help and support as possible from lenders.
"Being out of work will obviously put pressure on people's ability to pay their mortgage. However if they have up to six months before lenders start to push for repossession, then they have a good chance of being able to find a new job and get things back on track."
According to Burgess, the speed at which personal finances can deteriorate is often the biggest surprise for many households, who do not realise just how quickly their monthly bills will mount up or how little they have put to one side should something spring from out of the blue.
Although it was likely other lenders would follow suit in giving an extended grace period to borrowers in arrears, Burgess said it was important to try and avoid running into problems in the first place.
"Many workers will already feel less secure in their job and people need to take the time to think about how they would pay their bills if they were made redundant. It is not pleasant to think about, but ignoring the possibility of redundancy is crazy."
Burgess said there were a host of good value, flexible and easy to arrange payment protection insurance policies available to consumers.
"PPI means that when accident, sickness or unemployment hits, it does not knock families for six. Instead it gives them time to deal with the situation," said Burgess.
She added: "Using a respected and well-trusted independent provider like British Insurance will also mean that consumers get excellent value and excellent insurance. It is great that the banks are going to give borrowers a little more room for manoeuvre, but people cannot kid themselves and must understand just how quickly their finances can collapse. PPI will stop that from happening."