The Nationwide has reported that more than one in ten homeowners in the UK fear that they may lose their job in the next twelve months. This is almost double the number that were worried about redundancy just three months ago.

With jobs losses announced almost every day, it's not difficult to see why people are concerned. Even the service industry, which had been growing strongly, is now feeling the pressure of a world wide economic slow down with banks, mobile phone companies and recently the postal industry announcing job cuts.

But what can you do to protect yourself from the worst effects of unemployment?

As the biggest debt any of us are likely to have, your mortgage is one of the key areas to address. While mortgage rates are at their lowest since 1952, many lenders are failing to pass the benefits on to you. If your lender falls into this category, it could pay to look for another lender who offers consistently better rates beyond the end of any fixed or discounted deal.

A recent survey by NOP commissioned on behalf of the Association of British Insurers indicated that one in five consumers believed they could rely on the Government to help with mortgage payments if they were unable to work. However, following changes to benefit payouts, only 25% of new borrowers would qualify for support. Mortgage Payment Protection Insurance (MPPI) is designed to cover mortgage payments if you are unable to work due to an accident, sickness or unemployment. The Government wants at least 55% of mortgage holders to have MPPI by 2004. Currently this figure is only around 20%. As part of their support for this initiative, Nationwide is offering new mortgage borrowers and all existing Nationwide members moving home, MPPI free for 12 months.

Building up a cash buffer is another way to help protect yourself against uncertainty and unexpected eventualities. Nationwide recommends that you have an amount equivalent to at least three months salary put aside in case of emergencies. This means you can cover your normal monthly bills for three months if you lose your regular income, leaving you to search for a job relatively free of stress. Savings accounts are still one of the best choices for this as, although current returns are lower, they are reliable and allow you to access your money at any time.

Of course reducing existing debt when you have a regular income will help, as it may not be possible if circumstances change later on - leaving you with a greater burden when you need it least. Credit and store cards can often seem impossible to clear as most of your payments are eaten up by interest. Some store cards have interest rates of almost 30% and even some of the well-known credit cards have interest rates of around 18%-19%. If you cannot afford to clear your cards completely, shop around for one with a better rate. Many will offer a low introductory rate, but look for one that also has a low ongoing rate and check for penalty charges for late or missed payments.

Another option is to consolidate all of your existing debts under one personal loan. The interest rates are often lower than credit cards and a fixed term loan will make budgeting easier.

Finally one of the most essential points to help avoid financial problems is to know how much money comes into your household and how much goes out each month. Work out how much money you need to cover your household bills and mortgage. Then look at areas where you can cut down either by moving to cheaper deals for your utilities (gas, electric, water and phone). And of course, if you have concerns about your finances at any time, visit your local Nationwide branch where the local branch manager will be happy to help you find the best solution for your needs.

Distributed by PR Newswire on behalf of Nationwide Building Society
Written by Robin Bailey, Branch network director, Nationwide Building Society