As property prices and incomes both plummet for many due to the worldwide recession, many thousands of people are finding it more and more difficult to keep up with their mortgage payments. Levels of arrears are rising, and repossession proceedings are being started at a rate not seen since the recession of the 1990s.

Given these difficulties, many people who are having severe problems paying their mortgage are tempted to simply hand back their keys to the mortgage company and walk away from the whole nightmare, thus avoiding the stress of legal repossession proceedings. In fact, this 'voluntary repossession' option is sometimes even suggested by the mortgage lender as the best solution for their struggling customer.

Unfortunately, this so called solution provides a much better outcome for the lender than for the homeowner. The lender will be able to avoid the costs involved in the repossession process, and will be able to sell the property more quickly and so get the debt off its books faster. For the mortgage payer, things aren't as cut and dried.

For a start, until the property is sold and the mortgage cleared, you will still be liable for making repayments, and will be charged penalties if you miss them, This will increase the amount you owe at a dangerous rate. Also, in the meantime, you'll still have to live somewhere, and you could find yourself paying rent while racking up greater mortgage debt - and this situation could last a long time considering the slow housing market of today.

There's also the problem that the mortgage company will probably try to sell the house quickly at auction, and this could mean the price is heavily discounted - it might not even fetch enough to pay off the mortgage, so you'll have lost your home yet still owe money on it.

There's no easy solution to mortgage problems, but hoping to avoid repossession by handing back the keys isn't generally a good idea. Trying to get by long enough to sell the house yourself on the private market is likely to give a more positive outcome than walking away and hoping your mortgage company will keep your best interests in mind when settling the debt.