There has been a lot of talk in the press in recent months about the prospects of a double dip recession. Britain’s economic recovery has been sluggish at best, and some experts are predicting that we’ll slide back into recession before the end of the year. Unfortunately, the same experts find it remarkably difficult to predict what will happen, as double dip recessions are few and far between.

So what can we predict for the housing market if a double dip were to occur? There’s really very little good news, unless you happen to have a lot of cash at your disposal and can profit from a likely drop in house prices.

The bad news, however, mounts up rather quickly. In difficult economic times central banks look to slash rates, but we’ve already done that so there’s not much further to go. This means that banks will look to secure capital from other places, and as household finances become less secure, the cost of borrowing mortgages will probably go up.

So far, mortgages are currently at record lows, thanks to a combination of intense competition between relative newcomer Santander and the other big banks, and the low central base rate. A quick look at a calculator for mortgages, however, will show you that small rate increases can lead to big increases in the size of regular payments, so any increase in the cost of mortgages could be damaging.

Next up, house prices will probably slide further, bad news for homeowners who could face even bigger equity nightmares. Recessions have a double effect, first, more people can no longer afford to pay their mortgages and so face repossession. This then means that banks try to make a quick profit and are prepared to sell houses for low prices, pulling the overall market down.

Accompanying this is a lack of demand in the market as customers can’t afford, or can’t borrow the money to move house. This again pulls house prices down and forms something of a vicious cycle.

All rather grim, and to make things worse, many experts believe that the British housing market is still rather inflated despite recent drops in prices. That’s not to say that it’s another bubble set to burst, but that there is space for prices to fall further.

So, clearly, a double dip recession would be bad news for the majority of homeowners, but perhaps there are silver linings for people trying to get onto the property ladder for the first time, and prospective investors. For the vast majority of people, though, a double dip recession would be extremely bad news.

Unfortunately, there’s not a lot you can do to protect yourself against the effects of a fall in house prices, however, there are lots of free, cheap things that you can do to increase the value of your home (giving you more equity) – and decrease the amount you spend on things like energy and insurance. Check out the Energy Saving Trust website for a good place to start.

Many people like the idea of buying a second property, renting it out and then selling it for a bundle once the mortgage is paid off! And, let’s be honest, with interest on savings currently so low and house prices continuing to fall, now might be the right time to invest in a second property (rather than the bank).

However, although property can be a great long term investment and renting out a second home can be a great extra money earner, there are a lot of risks involved with buy-to-let properties. So, if you are thinking about buying a second home and letting it you should consider covering yourself with landlord insurance.

With a comprehensive landlord insurance policy you can protect yourself against the following problems:

Dodgy Tenants
Now I know what you’re thinking “I’m not stupid, I will do credit checks and get references and only rent to good tenants!” However, no matter how much you screen, check and reference the fact of the matter is you may end up with tenants who just won’t pay up!

They may lose their job, get into debt or face a huge unexpected bill and therefore not be able to pay their rent. In this circumstance, landlord insurance would cover you for any revenue lost.

Thieving Tenants!
Again, no matter how much you check and reference you may end up with a tenant who accidentally takes (steals) something from your flat when they move out. Again in this instance landlord insurance would cover you against any losses.

Clumsy Tenants
Hey, you may have done everything right and found yourself the perfect, gleaming tenant who pays on time, is always clean and doesn’t have any annoying pets! However, even the best of us have accidents and there is always the possibility that your tenants will accidentally block the drains, break fixtures or ruin a carpet.

It sounds unlikely but the cost of replacing carpets or repairing structural damage can be huge! So why not just get that extra piece of mind with some insurance. Listen, you may never use it but then again you may never claim on your car insurance, but that doesn’t mean you would drive around without any does it?

There may be some light at the end of the tunnel for first time buyers. Have a look at this press release from Equifax:

The launch of a number of 90% and 95% LTV (loan to value) mortgages in the last few weeks will be welcome news for first-time buyers with a small deposit. But leading instant online credit information provider, Equifax, is advising new homebuyers to check their credit file before making new mortgage applications, to ensure that they have the best possible credit status for the deals currently on offer.

“After the recession, 100% mortgages disappeared and buyers needed bigger and bigger deposits, making it very difficult to get on the property ladder,” says Neil Munroe, External Affairs Director, Equifax. “Cautious lending criteria also meant many consumers were unable to capitalise on property prices.

“The new 90% and 95% mortgages we have seen launched in the last few weeks, however, offer hope for first-time buyers. But it’s essential that anyone applying for a new mortgage ensures their credit file is looking good to give themselves the best chance of getting the best deal.

“In particular first time buyers need to ensure they are registered on the electoral roll at their current address – this is a crucial first check carried out by lenders and if they fail that their chances of getting a good deal could be scuppered straight away. They also need to be aware that if they haven’t been particularly credit active in the past this may have an affect on their ability to secure a good mortgage deal.

“Checking their credit file should be the first step, before shopping for a mortgage, as any refusals or too many searches on a credit file could make it even harder to secure a new mortgage. With a little preparation, homebuyers should be able to place themselves in a good position to gain access to new 90% mortgage deals.”

Equifax advises first-time buyers to get a copy of their credit report to see what the lender sees. As well as checking their electoral roll data and that all their current credit agreements are shown as paid up to date, their credit file will highlight any dormant accounts they might have forgotten about. Closing these will improve their credit status, as will paying off any agreements early.

“The two potential hurdles for a first time buyer with their credit file are a lack of any credit activity or missed payments on previous credit agreements”, continued Neil Munroe. “If an individual has never had any credit before this makes it hard for the lender to see that they will be a good risk. So it might be worth taking out a credit facility some months before making an application for a mortgage. If they make payments on time every month this will show potential lenders a responsible attitude to borrowing. For first time buyers who have missed payments in the past, they can add a Note to their credit file to explain the circumstances of past problems.”

Munroe concludes, “First-time buyers are essential to get the property market moving, but lenders still want to see that applicants are a suitable risk before approving an application. We welcome the new 90% and 95% mortgages, offering a vital lifeline for first-time buyers keen to get on the property ladder, but they will still need to ensure their financial house is in order to benefit from these deals.”

The Equifax Credit Report, with the facility to access credit information for the first 30 days free, is accessible simply by logging onto www.equifax.co.uk. Designed to help individuals understand their credit file and see what lenders see to assess new credit applications, the Equifax Credit Report also includes expert tips and advice to help consumers take the right steps to manage their finances and navigate through life’s challenges.

If the customer does not cancel before the end of the 30 Day Free Trial, the service will continue at £6.99 per month, giving them unlimited online access to their credit information and weekly alerts on any changes to their credit file. It also includes an online dispute facility to help them correct any errors on their credit file simply and quickly.

In the past decades, it was believed that a mortgage loan is a mortgage loan no matter whichever is chosen. But this theory is not workable anymore because of the many mortgage loan products available in the market. So, before choosing a mortgage loan, it is very important to decide which one is right for you. Finding the right mortgage loan means balancing your mortgage options with your housing requirements and financial picture, now and in the future. Also the right mortgage is not just having the lowest interest rate but much more than that. And this “much more” will be determined by your personal situation. Your personal situation and your limits to pay for monthly mortgage payments can be evaluated by answering the following questions:

• What is your current financial situation (including income, savings, cash reserves and debt-to-cash ratio)?
• How you expect your finances to changeover in the coming years?
• Have you plan to return the mortgage loan before retirement?
• How long you intend to keep your house?
• How comfortable you are with your changing mortgage payment amount?

The answers to these questions will give you the idea of your financial position. Now the next step is to decide two key options:

• mortgage length,
• type of interest rate (fixed interest rate or adjustable interest rate).

The length of mortgage loan can be minimum 15 years; can be 20, or at maximum 30 years. While selecting a fixed or adjustable interest rate you should be aware of the facts that the adjustable interest rate mortgage is more risky because the interest rate will change, while a fixed-rate loan offers more stability because of the locked-in rate. You will be able to pay off a shorter-term loan more quickly, but your monthly payments will be substantially higher. Long-term fixed-rate loans are popular because they offer certainty, and many people find that they are easier to fit into their budget. Although, in long run they will cost you more, but you will have more available capital when you need it, and you will be less likely to default on the loan should an emergency arise.

In the light of above mentioned aspects, it is clear that the key to select the right mortgage loan for your needs should fit comfortably into your entire financial picture, that is having payments within your budget and comfortable level of risk connected to it.