Property Rescue Blog

It’s that time of year when we all become frazzled with the chores of Christmas, the biggest of which is undoubtedly the Christmas shopping.  Finding original presents for everyone can be a real nightmare and when money is tight the whole task is even more fraught.

Shops are reporting that trade is light this year – no surprise in view of the state of the economy and people’s fears over job losses.  Those who have been unlucky enough to already lose their jobs will be looking to cut costs wherever they can, whilst others, such as the thousands employed by Woolworths, will be looking to the future with trepidation.

It is tempting to put the Christmas purchases on the credit card and worry about the bill later, but the income of many households has fallen and cannot be compared to this time last year when we were all spending more freely.  Those who have been unable to keep up with repayments on their credit cards will find that the interest will mount up considerably and if the debt cannot be controlled, interest will become payable on the interest.

Of course, the best policy is to use cash, not credit, for Christmas shopping.  But when we do use credit cards, keeping interest payments under control is something we all should try to do.  The nought per cent deals are few and far between, but it’s still worth shopping around to make sure you are not paying more than you have to. 

Bad debt will affect your credit rating and this will make it difficult to get future loans or credit.  If debts threaten to get out of control you need to take action.  Working out your monthly or weekly budget is always the first step and there are free services that will help you do this.  Be honest with yourself about how much you spend each week – even slight changes to your lifestyle can mean that you make savings.  Being aware of what you spend and how you spend it is a key part of controlling your outgoings.  It may be possible to manage your debt by agreeing to pay off smaller amounts of your loan or extending the time period over which repayments are made.  Always talk to your lender(s), as ignoring letters and phone calls will only make your situation worse.

Financial advisers generally regard bankruptcy as very much a last resort.  In some cases it is unavoidable but it is not a ‘soft option’ and has many repercussions.  One way of reducing or eliminating your debt could be to sell your home.  This may seem a drastic step, but with sell and rent back agreements you could stay in your home as a tenant rather than an owner.  Make sure you know all the terms of the contract before you sign up to any such scheme, and deal with a reputable company such as Property Rescue.

For information on sell and rent back, contact Property Rescue.  One of their advisers will talk to you in complete confidence and without obligation.

In a speech given on Tuesday 21 October in Leeds, the governor of the Bank of England, Mervyn King, admitted that the likelihood of recession in the UK was real and that the downturn could be ‘prolonged’.  Hot on his heels came the Prime Minister admitting in Parliament that recession was around the corner.

This could hardly have come as a surprise to anyone who has read the papers, watched the news or observed the downward spiralling of global economies over the past few weeks, yet the markets reacted the morning after Mr King’s speech with a tumble.  One does not doubt the validity of his warning but wonders whether spelling out the impending doom was justified.  After all, anyone unaware of impending recession must have been visiting from a far away planet!  It all begs the question of whether those in the know are talking a bad situation into a worse one.

There is just a glimmer of light, however, peeping through the darkness of the very long tunnel of home ownership.  The Bank of England reduced interest rates by half of one per cent earlier this month and some pundits think that that another cut will be necessary if Mr King’s warnings about controlling inflation are to be heeded.  Lenders have already responded to the initial cut and are likely to feel pressure to cut mortgage interest rates further should there be another cut in Bank rates.

Meanwhile, back in the long dark tunnel, the numbers of people entering negative equity are rising fast.  There is no end in sight to the fall in house prices, leaving some of those who have purchased recently in the worrying situation of knowing that their loan is more than the worth of their home.; all a grim reminder of the last property crash in the early 1990s.  Currently it is estimated that around 60,000 home owners are entering negative equity every month. 

If you are in that situation, you may be content to wait for stabilisation of the property market.  If cyclical trends are to be believed, property is likely to recover some, if not all, of its value over time.  For many, sitting tight could be the best option. 

But not everyone has the luxury of choice.  If you need to sell up because of rising debts or inability to meet your mortgage repayments, give Property Rescue a call and ask about their guaranteed valuation service.  Initial consultation with one of their experts is free and entirely without obligation.  They will not pressure you into proceeding and will not pester you with phone calls should you decide not to go ahead.  In a market where almost nothing is moving, it is still possible to sell your home.  Call Property Rescue for an informal chat and more details.

The rate of inflation has risen to 4.7%; new unemployment figures released this week show 5.5% of the working population were without a job during the three months ending July 2008; those claiming Job Seekers’ Allowance have increased, the number of redundancies is on the rise, and the world financial markets continue to be jittery. 

As economic gloom deepens, it feels as if we are all at the mercy of the government, world monetary forces and powers far beyond our control.  There is little we can do to control inflation it’s true, but there are a few simple measures that can help stretch the household budget, especially as summer turns to autumn and we switch on the heating:

• The government has announced help – via the energy companies – for  homeowners to insulate their homes.  Your energy supplier will know more  and should be contacting you with details of how you might benefit.
• If you haven’t already shopped around for gas and electricity, now’s the time  to do so.  A surprisingly large amount of money can be saved by switching  provider.  Cost comparison sites are available, such as uSwitch.com. 
• Think about where you shop and what you buy, but remember to take  account of all the factors involved.  If you buy mainly in a cheap supermarket,  but ‘top up’ with luxuries from two others, you’re likely to spend more in petrol  than you save at the till. Use the facilities you already have – like your freezer  – and plan ahead when you’re grocery shopping so that the number of trips  you make is reduced.  Planning and making a list will help you buy only what  you need and avoid throwing out food past its sell by date.
• Don’t dismiss second hand stuff!  If you have growing kids or are expecting a  baby, look out for second hand shops, charity shops and car boot sales,  where new or nearly new clothes and toys can be picked up for just a few  pounds.
• Watch the interest on your credit cards.  If you have a big credit card bill, look  at transferring the balance to a company who offers a balance transfer  deal.  A little surfing on the net could save you a lot of money!
• Use comparison sites to check that you’re getting best possible deals on  insurance for your car, home and contents.  It’s tempting to ignore home  contents insurance when you’re strapped for cash, but if you change your  existing arrangements, you could save a significant sum without having to  relinquish it.

At Property Rescue we hope these tips come in handy.  They’re all simple things that are easy to do but very worthwhile.  Remember, if budgeting becomes impossible and you can no longer afford your mortgage repayments, always talk to your lender.  They will be keen to help you if at all possible.  If you need to sell to avoid repossession or simply to cancel out debt, then contact Property Rescue.  Even in such a dire housing market, they still guarantee to make an offer for your home.