What can I do about my mortgage if I become unemployed?

Q I am worried that I could be made redundant within the next six months, but I have just taken out a mortgage on a new one-bedroom flat with my girlfriend. We can only barely manage the repayments with two salaries coming in, and I don't know how we would cope if I lost my job. Is there anything I can do now in case I do end up unemployed?

JC

A Yes, there are steps you can take now to ensure that your finances are in good order in case you do end up without a regular income for a few weeks or months.

Firstly, try to reduce your outgoings - i.e. the money you spend on entertainment, takeaways, travel etc. Can you share a lift to work, cook for yourself instead of eating out, and leave your credit card at home when you go into town on Saturday? Even small changes to your lifestyle will help you conserve your cash. Secondly, think about looking for the best deal on essentials, such as utilities, by using our comparison table.



With the savings that you make, you can start to pay off any outstanding debts and loans. Switch your credit card balance to a card with a 0 per cent introductory rate of interest, and pay off chunks of the capital as quickly as you can. There is no point in looking for a home for your savings if you are paying 14 to 30 per cent APR on loans and store card debt.

Redundancy is not the end of the world, though it may seem like it at the time. In fact, for many people it is an opportunity to evaluate what they like and dislike about their job, and even perhaps help them decide that they would like to change career. You don't say where you work, but your employer may be able to give you retraining, introduce you to recruitment agencies, or provide career advice. Don't be proud - make the most of any help you are offered.

As for your redundancy package, many employers pay more than the statutory payment, particularly if you have been with the company for several years. If you get a lump sum payout, consider putting it in a high interest account, which you can use as an emergency fund if you don't find work straight away. You don't say whether you have taken out mortgage payment protection insurance, but if you have, ask your bank or building society for a copy of the policy so that you can check out the terms and conditions under which you can claim.