The top worst 10 towns for property repossessions

If you own a property in one of these towns, then your property is more likely to be de-valued by local repossessions. John Fitzsimons looks at what you can do if your home is at risk.

From the onset of the credit crunch, the big worry for everyone has been the issue of repossessions.

The media were full of horror stories about borrowers starting to struggle with their mortgage payments, and unscrupulous lenders giving them no breathing space, immediately opting to begin repossession proceedings (the Government-owned Northern Rock was highlighted as a particular offender).

Thankfully the Government stepped in to ensure lenders appreciate that repossession is only a last resort, though the latest predictions suggest the situation will get worse in 2010.

The Government has also highlighted just which areas are most at risk of the dreaded R word. If you are in the West Midlands and the North West, then brace yourselves.

The danger list

Below are the 22 towns identified by the Government as the areas with the highest proportion of homeowners at risk of repossession.

Barking and Dagenham
Birmingham
Bolton
Cannock Chase
Corby
Halton
Kingston-upon-Hull
Knowsley
Liverpool
Manchester
Newham
Northampton
Nottingham
Reading
Redditch
Salford
Sandwell
Sunderland
Swindon
Walsall
Wigan
Wolverhampton

It's clear to see that towns in the West Midlands and the North West make up the bulk of the repossession hotspots, though East London is far from safe with both Newham and Barking and Dagenham flagged as danger areas.

The list has been put together as part of a Government campaign - including ads in newspapers, online and on billboards - to improve awareness of the Government's advice networks on the issue of repossessions.

Since April 2008, more than 300,000 homeowners have received help and advice in paying their mortgage.

How big a problem?

Of course, from the onset of the credit crunch, there have been grave warnings about just how bad the repossession situation was likely to be in the UK.

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But the truth is that things have never got quite as bad as those initial warnings made out. The Council of Mortgage Lenders, the trade body for lenders, initially predicted repossessions for 2009 to stand at 75,000.

However, it revised those forecasts a number of times over the course of 2009, eventually settling on 48,000. In the end, repossessions levels were still better than predicted, with 46,000 properties taken into possession. Obviously, that's still not ideal, but it is still nowhere near as bad as it could have been.

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Arrears of the year

It's a similar story with arrears (i.e. falling behind with your mortgage payments).

Again, the Council of Mortgage Lenders spread a message of doom, forecasting that 195,000 borrowers would end the year with arrears equivalent to at least 2.5% of the outstanding mortgage balance (So £2,500 or more in arrears on a £100,000 mortgage balance).

Again, the final position was better than forecast, with 188,300 mortgages in that position.

Indeed, even being in arrears is not as bad as it seems.

Take the research published at the end of last year by the Building Societies Association, which found that 97% of borrowers that have fallen into arrears in the last two years remain in their homes, and are now repaying the mortgage again.

According to the research, a third have repaid their arrears in full, with 41% in the process of repaying their arrears. And the key factor in them retrieving the situation is getting advice, whether from the lenders themselves or from a professional outfit.

What to do if you're in arrears

It's that word - advice - that is fundamental.

Everyone in the industry agrees that the best way to get out of arrears, and stave off the threat of repossession, is to talk to your lender as soon as you start to experience difficulties. The earlier the better.

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It also makes sense to get independent advice as well, but I would always warn against debt management companies. Undoubtedly some offer a decent service, but if you can get the same expert advice for free, then it's crackers to actually pay for it.

Instead, you should start with the Government's own Mortgage Help website, which gives all sorts of advice, whether you are just starting to experience difficulties in paying your mortgage each month, or whether proceedings have already been initiated by your lender.

It also includes a host of real-life stories which outline in detail how the Government's programmes can help, while there is also a Directgov page providing plenty of advice, with instructional videos as well.

There are a bunch of other organisations which provide great debt advice absolutely free. They include outfits like Citizens Advice, National Debt Line and the Consumer Credit Counselling Service, while it's also well worth having a read of Get out of debt with free advice.

Yes, repossessions will be a fact of life for a while yet, irrespective of the more positive noises beginning to come out of the housing industry. And while certain areas have been hardest hit, falling into arrears does not mean you are inevitably on the path to losing your home. The key is to face up to your difficulties early, and speak to professionals.

This is a lovemoney.com classic article, originally published in Septemer 2009 and updated

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