Mortgagee sales are soaring, with one expert predicting almost 10 homes a day will be taken by banks.

With mortgagee sales predicted to hit 250 a month, struggling homeowners are being urged to front up to their bank manager.

Tell the bank you are in financial strife before you miss a payment, says Darryl Evans, chief executive of Mangere Budgeting Service. "It's harder to turn the situation around when it's extreme."

Without a rescue plan involving the bank, people risked having their home sold from under them, he said.

James Young of Auckland University real estate research said people paying a high proportion of their income in mortgage payments - usually first-time buyers - were most vulnerable to mortgagee sales, as were those who had lost their job or had their hours cut.

Evans said there were ways homeowners could stay in their properties depending on how much work they wanted to put into it, and "lots of options providing you put your hand up and say you need help".

Mortgage broker Steve McGowan said: "If you go to ground, you give the bank no choice but to throw the book at you." Once a bank started issuing Property Law Act notices, it generally didn't back-pedal he said.

Kiwibank spokesman Bruce Thompson said struggling homeowners had to go through a "raw process" of confronting their financial situation and "telling all" before they could work with the bank.

"The idea of someone selling in a depressed market and walking away still owing money is the worst possible outcome. The best possible outcome is that they can get to a position where they can manage their debt and get through until the market or their personal circumstances improve."

But Evans said banks were not working with budgeting services quickly enough, instead they were threatening homeowners with losing their homes. "What we need is less panic and more dialogue - the banks just have to be a lot more reasonable."

Christchurch couple Kerri and Jay had owned their home for seven years and reduced their mortgage to just 60 per cent of their home's value when the company Jay worked for folded in November last year. They approached their lender, Sovereign, and asked for a three-month mortgage "holiday", but Sovereign wouldn't play ball.

Three months later, Jay landed a new job but by then the couple had fallen behind on their mortgage payments.

They put as much as they could towards their mortgage but didn't talk to their lender again, and were served with official documents advising them that they were facing an imminent mortgagee sale.

Kerri talked to Auckland mortgage broker Jeff Royle, who advised her to confront Sovereign, which was prepared to halt the mortgagee sale proceedings if Kerri and Jay cleared their arrears, so they raised a personal loan with another financier and did so.

* Five steps to halt a mortgagee sale

Call the bank and ask to be sent a budget sheet and statement of position form. Make an appointment to go and talk about your finances, giving yourself enough time to see a mortgage broker and prepare a proposal for managing your situation first.

Contact a reputable budgeting service. There are more than 200 free budget advisory services around the country and a free budget phone line: 0508 BUDGET LINE (0508 283 438).Ask whether an adviser can accompany you to the meeting with your lender.

Put on paper how much money is coming into the home and what the true values of the outgoings are, and put a workable budget plan into action.

Look at ways of boosting your income - through part-time work or taking in a flatmate.

Be honest and open with your bank and your advisers.