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.

It’s the question on every homeowners’ lips.  Just how far, and how fast, will property values fall and when will it all come to an end?   Let’s begin by taking a look back at the staggering change in the market we’ve seen over the past year or so.

Towards the end of 2007 only a tiny minority of financial commentators were forecasting a slump in the value of property but the New Year brought with it pessimism and – for the first time in many years – predictions that prices would fall.  At that time the fall was described as a mere levelling off, perhaps a 5% reduction; a theme that continued into the Spring.  But as Summer arrived that percentage became higher, with many banks, lenders and experts saying that the average home would drop in value by between 10% and 15%.  Bad enough, but still far from today’s forecasts of a 25% to 30% drop.

Respected property giant, Savills, is sticking with its analysis that property will have slumped by 25% from its peak at the end of 2009.  They point out, however, that in central London falls could be up to 30%.  On a brighter note, they do predict a slow recovery, which – they say – will be strongest in the South East and will begin in 2010. 

Nationwide Building Society confirms these fears, stating that it too expects house prices to continue to fall over the next two years.  The lender has greatly reduced the number of available mortgages as its pre-tax profits drop 18% over the six months to 30 September. 

It would seem, therefore, that there is little chance of imminent recovery and all the indicators point to the fact that house prices have yet to bottom out.  Whilst this remains the case, first time buyers are hesitant, waiting to see if they can get a better deal and negotiating hard with lenders for the few available mortgages.  Those most vulnerable are those who have bought over the past two to five years when prices were high and lending was lax.  Mortgages of many multiples of salary can spell disaster in a falling market as negative equity comes knocking at the door and job security is threatened.

In an uncertain market there is a certain way to avoid your home being repossessed and that is to sell to Property Rescue.  Their experts will give you a no obligation valuation for your home and although this will be below the current market value, it will – if you accept the offer – guarantee a sale.  If you delay, the value of your home is likely to fall further, so the loss you make on the sale needs to be weighed against the consequences of putting off your decision.  Anyone facing the threat of repossession will not have the luxury of time on their side and will need to act quickly. 

Property Rescue talk to their clients in complete confidence.  They recognise the stress that financial hardship engenders and will explain the process of buying your home in a straightforward way.  Remember, there is no obligation to proceed if you are not completely happy with the service they are offering.  Call Property Rescue today to find out more.

We sometimes forget how much cash is tied up in your home. Releasing this cash could prevent repossession and aid some financial problems you are facing. It is all well and good relying on the value of your house to go towards a bigger and better home – if you can afford it. In the current economic crisis and the struggling property market, it is no shame to admit that your current home is presently beyond your means. So why continue struggling to pay the mortgage payments, and interest payments alike which you cannot afford. House repossession is a very real possibility in this situation, one which could be avoided. Selling your house, to either move in to the rental market, or to downsize could be the answer you are looking for.

Does it really matter how many bedrooms you have? How many guest rooms you have? If you have that landscaped garden you were always after? Or is it better to go to bed at night knowing that you can afford to pay the bills to live in your home, even if it is slightly less modest.

Releasing the equity in your home can stop repossession, and allow you to use some of the money to provide a smaller property. Alternatively, releasing the equity could provide suitable funds for various schemes, including sell and rent back, sell to rent, or simply to sell outright.

With a sell and rent back scheme, the equity can be released from your home. You can ignore the added problems of moving, and you can remain in the property that you have made home. Furthermore, the speed at which such a scheme can operate is much more efficient as there is no searching for a new property, waiting and hoping for a genuine buyer for your property.

In this scenario, although the rental fees may be slightly greater than the mortgage fees, they will be short term, and the lump sum of equity will be used to pay off debts, or can sit in the bank counting the interest.

This works in a similar way to selling your property to move in to the rental market, as the equity released from your home can be used to help finance other ventures, pay off debts, or be used as a deposit on a new home.

A major re-occurring problem is the fixed-rate mortgages coming to the end of their term. Which as a result can greatly increase mortgage payments practically over night. The monthly costings are completely out of proportion, and if your salary cannot absorb the added charge, then you can very quickly gather up debt.

This is also apparent in interest only mortgages. In these instances the property is effectively never yours, so an advantage to watching property prices rise is to release the equity in the property. Thus reaping the rewards of an increase in value, and either re-mortgaging or renting the property back – either way, you can feel those financial strings pulling a little less, and prevent any form of repossession.

As anticipated, the Bank of England’s Monetary Policy Committee (MCP) has cut interest rates today.  What was not anticipated, however, is the size of that cut.  Half of one per cent was expected, maybe one per cent if the bank was feeling brave, but very few foretold the massive one and a half per cent that the MPC obviously feels is required if it is to have any effect on inflation and the threat of recession.

This brings bank rates to 3.5% and is a move that has been welcomed by the CBI but how will it affect those with mortgages, credit card debt or other loans? 

One of the areas where bank rates affect most of us is the impact they have on our mortgages.  Indications are that there will be a downward movement in mortgage interest rates but so far the lenders are ‘unsure’ as to how much of this cut will be passed on to borrowers.  The value of property has dropped sharply over the past year and those who have borrowed against the value of their home might be feeling the pinch.  Similarly, those who bought property recently could be facing the fact that their home has decreased in value.

The credit agency Experian quoted some astounding figures in August this year, in which they said that  many middle class areas have household debt of more than £53,000, not including mortgages.  Spending in good times when property values are high and jobs are secure is one thing; paying it back in less prosperous circumstances is quite another, even if the interest rate has dropped.

The question on everyone’s lips is whether this huge bank rate cut will boost the ailing property market.  First time buyers ought to be encouraged but whilst mortgages are scarce and nervousness over long term values remains, the jury is out as to whether it will be enough to stage a revival.  Mortgage interest reductions will help some households manage their finances, but set against this are Christmas shopping costs, a huge level of individual debt and dramatic increases in fuel bills, the effect of which is likely to hit in the first quarter of next year.  

Families in financial crisis will need to look hard at their Christmas budget and think of ways in which they can either cut their expenditure or boost their income.  Second jobs, renting out a room in the house, selling unwanted items on the internet – these are all ways of making a bit of extra cash to help out over the Christmas season.  But in cases where financial problems are serious these initiatives alone are unlikely to be enough.

Facing debt is difficult, lonely and stressful. There are agencies that help people in this financial crisis, such as the Citizens Advice Bureau and the government’s national debt line. If you want to sell your home to raise cash or to avoid repossession, you may be thinking a sale will be impossible in the current climate. That’s where Property Rescue can help.  They guarantee to give you a valuation for your home which, if you accept it, will lead to a fast, secure sale.

Give Property Rescue a call for more details.  You can speak to one of their experienced advisers in complete confidence and entirely without obligation.

Unemployment figures released this week show 1.79 million people out of work in the UK (measured between May and August 2008); the highest number since the 1990s.  This figure is expected to increase to 2 million by the end of the year, with many analysts predicting further rises during 2009. 

The construction industry has been hard hit as work slows or stops completely on new builds throughout the country.  As well as affecting those directly involved in building trades it has a knock on effect for suppliers and manufacturers.  Additionally, the manufacturing sector – already weak in the UK – has recorded an all time low in the number of people it employs.

The UK is a nation of small businesses, many of which are sole traders or employ under 10 staff.  It is these that are affected most immediately when work dries up.  Without large asset value or access to funding they can find themselves in a cashflow crisis that can bring them down within a few months or even weeks.  This is compounded by the fact that nervous banks are reluctant to renew loans or allocate new investment, especially to businesses that are struggling. 

For every ‘statistic’ whose business goes under or who is laid off due to lack of work there is a personal story of hardship.  Many of these are homeowners with mortgage payments that become difficult – or in some cases, impossible – to meet.  The minority will have insurances that meet the cost of mortgage interest, but those who default on their repayments will increase the burden of an already serious problem for the lenders.  As unemployment rises there is sure to be an increase in the number of repossessions taking place.  With house prices continuing to fall, some lenders will find themselves having to accept a sale price that is lower than the outstanding mortgage.

At a difficult time for homeowners it is reassuring to know that there are options open, even when the situation looks bleak. 

Lenders will encourage you to talk to them about making different arrangements whereby you can meet your payment obligations.  For example, they may be prepared to lengthen the term of your loan, or accept smaller (or interest only) payments for a period of time until you get back on your financial feet.  Always communicate with your lender when times are hard.  They will be much more responsive to you at this stage than if you bury your head in the sand until the situation is critical.

If you simply can’t meet repayments, you might want to explore other options that will allow you to stay in your home.  There has been some negative publicity about the less reputable companies that offer buy and rent back schemes.  Property Rescue has a sound financial backing.  Their experts have years of experience in many aspects of the property market and will explain all the options to you clearly before you make any commitment.  If this is an area that you want to explore, then explore it with Property Rescue.  Valuations of your property are free and there is no obligation to proceed. 

Call for more details about how the scheme works.

This is a short guide to the process that your lender will have to follow if your house is to be repossessed.  Remember, your lender has an obligation to act fairly as well as to comply with the law.  If you don’t think they’ve done so, consult your Citizens Advice Bureau or a Solicitor, who will help you take the matter further. 

• Arrears
  Lenders can start proceedings against you if you default on two mortgage  repayments but in reality many are reluctant to do this and will work with you  wherever possible to find a solution.  Your lender will write to you chasing  payments, so you should speak to them as soon as you start experiencing  financial difficulties.
• Solicitor’s Action
   If your mortgage repayments remain outstanding for 4 to 6 months the  lender is likely to put the matter into the hands of their solicitors.  You will  receive a letter asking for payment in full of the outstanding amount.  If you  haven’t already made contact with your lender, make contact with their  solicitors – both parties want to see you remain in your home and repay your  debt, even if payments are temporarily lower or the length of the mortgage  has to be extended.  Don’t ignore any communication from your lender’s  solicitor.
• Court Action
  If you cannot pay or cannot reach an agreement to reduce your payments in  line with what you can afford, or if you fail to communicate with your lender or  their solicitor, the lender will start action against you in the County Court. You  will be informed of the date of the hearing, which you should attend after  seeking advice from the CAB or your own solicitor. 
• Court Decisions
  This article does not allow us to go into depth about the variety of options  open to the Court, but they may dismiss the case if payment has been made  in full, or, in certain instances, an adjournment may be sought.  If your home  is to be repossessed an Order for Possession will be made.  Sometimes this  Order is deferred to allow you more time to repay your debt.
• Moving Out
  If the Court has granted an Order for Possession it will have stated a date by  which you should have moved out of the property.  If you are still there after  that date you may be evicted.
• But don’t despair!
  Even once the repossession chain of events has begun you can still avoid it by talking to Property Rescue.  They have helped people in your situation, even up to the very last minute, and guarantee to make an offer for your home.  You can sell to Property Rescue but remain as a tenant or you can decide to move out and clear your debts from the proceeds of your sale.

Don’t bury your head in the sand if repossession is threatened.  It won’t go away and avoiding communication with your lender or their solicitor is likely to make matters worse.  Property Rescue’s advisers are sympathetic to your situation.  They will provide you with all the details you need in complete confidence and entirely without obligation.

This week the government has announced a £1bn package of measures designed to help homeowners through the current financial crisis.  Whilst everyone must surely welcome this news, the question as to whether it will go any way towards resolving the stagnant housing market remains unanswered.

In brief, the measures include:

• raising the threshold at which stamp duty becomes payable on property     purchase from £125,000 to £175,000 – effective immediately
• more government help with mortgage interest payments for those on income support or claiming job seekers allowance, plus a reduction in the length of time such people have to wait before they’re entitled to this help (a reduction from 39 weeks to 13 weeks)
• raising the threshold of the loan value on which people on income support and job seekers allowance can get help with interest payments – up by £75,000 to £175,000
• £200m into a scheme whereby ‘social landlords’, such as councils and housing associations, will help homeowners who get into difficulties – perhaps through part ownership or additional lending

Some first time buyers who have been putting off the purchase of their first home may be persuaded that this is now a good time to enter the market.  If this happens it could provide a kick start to the bottom property tier and help those in existing chains to complete.  However, there is scepticism over the effectiveness of these measures because none of them address the issue of money supply, which has been at the heart of the credit crunch  The number of mortgages being approved has fallen by more than 70% over the past year – a trend that is expected to continue.  Without funds available for first time buyers and others, the housing market seems doomed to remain in its current state of malaise.

Interest rates were held at 5% by the Bank of England at its meeting on 4 September – the fifth month in a row that rates have remained static as the Bank struggle to contain rising inflation.  The threat of a recession could, however, mean that the Monetary Policy Committee elect to reduce interest rates very soon in an attempt to buoy up a flagging economy.

Homeowners in debt should study these new measures carefully.  Some could find that the help on offer from the government is enough to see them through current difficulties, but inevitably there will be those for whom the situation is too dire or the financial problems too deep.  If you are facing the possibility of losing your home, talk to Property Rescue about their guarantee to buy your property.  Their service could allow you to stay in your home, rescue your credit rating and get through the hard times ahead.  Contact them for an informal chat without any obligation.

Homeowners struggling to pay their mortgages should be able to sell part of the equity in their homes to avoid repossession, the Liberal Democrats have said.

James Kirkup, Political Correspondent, The Guardian

The equity sale scheme is part of a package of measures drawn up by Vince Cable, the party's Treasury spokesman, to meet what he says is the urgent need to avoid thousands of families losing their homes.

A slowing economy and rising mortgage costs are putting growing pressure on millions of homeowners.

Figures earlier this month showed that the number of repossession orders made by courts in the second quarter of 2008 jumped by 24 per cent. A total of 28,658 orders were made in England and Wales between April and June.

Mortgage-holders struggling with their repayments should be able to sell all or part of the equity in their house and rent it back from housing associations or even private companies, Dr Cable has proposed.

The Liberal Democrats also say that courts should be given new guidance to ensure that they only order homes to be repossessed "in extreme circumstances".

Councils and housing associations should also be allowed to borrow money from commercial lenders and use it to buy land and empty homes for use as social housing.

Dr Cable outlined his plans as ministers complete their own economic assistance package, expected to be published as early as next week.

The Treasury is known to be considering a stamp duty "holiday" in the hope of stimulating the housing market.

Dr Cable said that showed ministers are missing the point.

He said: "The Government seems obsessed with fighting a losing battle to artificially prop up the housing market, rather than finding ways to deal with its worst effects.

"Ministers must act to help the thousands of families struggling to keep a roof over their heads.

Source of Article: http://www.telegraph.co.uk/news/newstopics/politics/liberaldemocrats/2632080/Struggling-home-owners-should-sell-equity-to-avoid-repossession-say-Lib-Dems.html

The Bank of England released its latest inflation report this week.  All eyes were on the Bank’s governor, Mervyn King, as he delivered the bad news that had been anticipated – that inflation is up (currently at 4.4%) and is likely to go up yet further, peaking at around 5%.

Mr King described the situation as “painful”; no under-statement for the thousands if not millions of people who are just about managing to make ends meet whilst they live in fear of inflation rising yet further.  For these households there were few rays of hope n the bank’s report.

Output growth has slowed in the UK over the first two quarters of the year.  When figures are released for the third and final quarters, the Bank of England expects to see further slowing and little change during 2009.  But there is a caveat: the Bank says that the slowdown may be “more pronounced” with the possibility of negative growth. In fact Mr King comments that the “outlook is unusually uncertain” and points to significant risks that could affect its projected figures.

It is inevitable under such circumstances that pressure is put on every household’s income, even those who have, until recently, considered themselves well off.  There is evidence that up-market suppliers of products – such as organic or farm produced food – are seeing a drop in their sales as people look to the cheaper supermarkets for a bargain.  Oil prices have started to retreat back down the scale but food costs are unlikely to do so.  Spending on credit is restricted and this has an obvious effect on spending in the high street.

Bank rates remain at 5%, despite industry wanting a cut and homeowners feeling the strain.  Although it is often high interest rates that produce a rise in home repossessions, in the present situation it is more likely to be food and energy prices that are turning the knife in the household budget.  Repossessions are rising steadily – perhaps an inevitability in such circumstances.  But anyone who faces the threat of losing their home owes it to themselves and their family to explore all the options before packing the furniture and moving out.

Talking to the lender in question is always the first step.  Voluntary and government funded agencies can help households budget, prepare payment plans and communicate with mortgage companies and banks.  If, despite this type of intervention, mortgage repayments simply cannot be met then there may seem little option.  Property Rescue is a company that buys home for cash.  They have the ability to step in at the last moment to salvage the situation and help avoid repossession taking place.  Their guarantee of a sale allows families to move on with their lives, perhaps buying a lower priced property, living in rented accommodation, or by taking advantage of the Property Rescue sell and rent back scheme.

The economic gloom that has descended on the UK may be out of our control but there are options when it comes to personal finance – even though it may not always seem like it.  For information and a free, no obligation chat, give Property Rescue a call.

Those were the words of Mervyn King, the Governor of the Bank of England, during his speech to Bankers in the City on Wednesday.  The picture painted by Mr King was dire, but however we like to look at it, the changing economic landscape means we’ll all have to put our hands in our pockets.

Mr King warned against a culture of pay demands to provide for increased household costs, a sentiment that is likely to be unpopular on the high street where the average consumer is feeling the pinch as gas, electric and oil prices continue to rise.  Further warnings came this week with the news that gas and electric could rise by up to 40% by the end of this year, pushing more and more people into debt or poverty, or both. 

So why doesn’t Mr King want wages to rise to pay for all this?  Looking back to the 70s, inflation was out of control and so were wage increases driven by union demands.  No one would want that situation to return, but are the key factors the same now as they were then?  Price rises are highest in essentials such as food, petrol and heating; luxury items are costing less and less, trade unions have lost the power they once had, employment figures remain relatively stable and the overall rate of inflation is only 3.3%.

Despite this, the Bank of England relies on interest rates as its key weapon in the attack against inflation.  If wage demands get out of hand inflation will go up.  In order to curb that, Mr King would need – and has threatened – to increase interest rates, which in turn would lead to pressure on businesses, a rise in unemployment and an increase in home repossessions. 

The uncertainty therefore continues.  No home owner with a large mortgage can rest easy, even if they have a good level of income.  Negative equity is knocking at the doors of many recent purchasers and the threat of further economic hardship when winter fuel bills drop on to the doormat, is bound to affect many.

If you think you are likely to face financial problems try to pre-empt the situation by talking to one of the voluntary bureaus that will help you with budgeting and, in some cases, liaise with your debtors on your behalf.  If you stand a chance of losing your home through repossession, talk to Property Rescue.  Their guarantee to buy your home could mean the difference between becoming bankrupt and remaining solvent.   You could even stay in your home as a tenant after it has been sold to Property Rescue, enjoying all the rights that tenants normally have, without the disruption caused by moving to another area.

For further information or advice, call Property Rescue today.  Their experienced advisers will talk to you in complete confidence and without any obligation.