The outlook for the UK housing market is still unstable and one expert has warned that homeowners should not rely on state aid to fully cover their mortgage repayments if they lose their job.
Homeowners are facing problems selling because of tighter mortgage lending criteria and the industry could be restricted further if new EU regulation comes into force later this year.
In 2009, the government launched the Mortgage Rescue Scheme to help people who were struggling to keep up their repayments and wanted to downsize. The scheme was meant to help 6,000 struggling households but so far it has helped only 2,600 in two years.
It was thought that each rescue would cost about £34,000 but this turned out to be a ridiculously low estimate and the average rescue cost stands at £93,000.
Despite government cutbacks, as many as 33% of homeowners think the state will step in and cover their contractor mortgage repayments if they suddenly found themselves without a source of income.
Even more surprisingly, a recent survey discovered that only 11% of homeowners have mortgage payment protection insurance and just 4% have income protection insurance. At the same time, nearly 50% said they would be able to survive for no more than three months if they had to rely solely on their savings. Mortgage payment protection can offer a real lifeline to householders who find themselves in financial difficulties.
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