Property Rescue Blog

The words ‘negative equity’ have not been heard much over the past ten years but back in the early 90s they were on the tip of everyone’s tongue.  Could it be that we’ve had it so good over the past decade that we’ve forgotten what true economic slowdown is all about?

There are reports in the media this week that negative equity is – sadly – coming back into fashion.  The banking giant, Citigroup, announced that 250,000 households in the UK are now facing the fact that their home is valued at a sum which is less than their mortgage.  Citigroup calculate a drop of 7% in house prices over the last 9 months; although not a figure to which all lenders would agree, few would argue that we’re in a downward trend that is bound to affect homeowners in the future.  Estimates show that if house prices continue to fall one million households will be in negative equity by the end of 2009.

Factors other than national economics are starting to take their toll: the rise in oil and petrol prices and the general increase in food prices worldwide.  The Bank of England kept interest rates the same at their meeting last week and show little inclination to reduce them for fear that inflation in the UK will take off.

The big mortgages that were made essential through rising house prices mean that any hike in interest rates, however small, is hard to bear.  Many ‘buy to let’ mortgages are being pulled by lenders and borrowers without substantial deposits are frequently being turned away.  The fact is that mortgages – especially cheap mortgages – are becoming as rare as the proverbial hens teeth, thus hitting the first time buyers and sending ripples upwards through the housing market as a whole.

These factors combine to make a difficult housing market into an impossible one if you are trying to sell your home.  Drive down almost any street and it isn’t difficult to find ‘for sale’ boards, but seeking out those elusive ‘sold’ boards might take you rather longer.

Selling your house may be a nightmare in the current climate, but it is still possible with the service provided by Property Rescue.  The company guarantees to buy property of all types and in all locations, no matter what condition it is in.  Their valuation is given without obligation and in complete confidence; it will be up to you whether you want to proceed and if you decide not to, no one will call nor will you be pressured into going ahead. 

If you are beginning to think you’ll never sell your home, why not talk to Property Rescue.  Their expert advisers are waiting for your call.

The UK property market is currently going through its biggest period of uncertainty for almost 16 years. As a result, there is a lot of jargon flying about the press concerning the implications of the property slowdown, the various reasons why it may be happening and how the market and the Bank of England are trying to combat the lull.

One of the major issues currently being discussed at the moment is the rise of sell and rent back companies in the sector. As a relatively new concept, it is open to much suspicion, especially as it tends to blur the lines of the different market areas.

The basic idea is that a person sells their home to a specialist cash buying company and then rents back the property at local market rent. Although debt management is the most talked about motivations for this, there are a number of different reasons that people decide upon this course of action, including divorce, equity release, expedient sales or emigration.

There are advantages to sell and rent back for all of these motivations. Cocerning debt management, the ability for a sale to be completed within 48 hours is advantageous when trying to stop repossession. Property Rescue is also able to eliminate up to 80% of all unsecured debt without using any proceed from the sale, due to a dedicated Debt Management Department, a service offered as part of the package.

With regards to equity release, the main benefit over traditional equity schemes is the ability to unlock 100% of the property’s equity. In addition, most equity release companies only deal with people approaching retirement age, due to their position on the property ladder and equity amount in their home.

The main disadvantage of course, is that the offer on your house will be below market value, usually around 80% off the market price. Obviously this can be difficult for many people to reconcile, but the reason sell and rent back has continued to grow is that although it seems a heft price to pay, the advantages further down the line for peoples finances outweigh the initial discount. Preserving credit ratings or offering a divorcee the opportunity to stay in their home instead of facing a move, tend to take precedent in this situation.

The unregulated nature of the market does it leave it open to unscrupulous traders. It is vital that all efforts should be taken to avoid these companies. A little bit of research usually exposes crooked brokers.

It is vital that when facing a decision that effects your financial future, all avenues are explored. If deciding that sell and rent back is an option that you would like to investigate, ensure the company you are dealing with a reputable and experienced in your situation.

Britain’s spiralling debt crisis has led to a sharp increase in the amount of people taking out debt consolidation loans as a way of dealing with financial strife.

The lure of a single monthly payment and a lower interest rate has been too strong for many. On the surface, the benefits are obvious. Although the covering loan tends to be significantly higher than the amount needed for repayment, it usually has a fixed, lower interest rate. The pressures of keeping track of multiple creditors is also relieved by providing the debtor with a single debt source.

But if you dig a little deeper, the full extent of the dangers of debt consolidation become apparent. Many people are tempted into consolidating unsecured debt into secured debt, usually against their home. The loan is usually significantly higher than the debt, which means that failure to pay off the full amount puts the debtors home at risk. Far from dealing with the source of the debtors financial problems, debt consolidation loans only deal with the symptoms. In addition to a large repayment amount, many people are coerced into PPI (Payment Protection Interest), scaremongered into believing that this will aid them in the long term. In 2004 Lloyds TSB had their knuckle rapped by the Banking Code for allowing a man to accumulate £6,000 (a fifth of his final loan) in PPI
 
Before deciding upon a debt consolidation loan, make sure that you do your research into all of your available options. Banks will usually offer a payment plan to those in financial difficulties. This will freeze the debt but severely hamper the debtors credit rating. The debtor will also be prohibited from taking out any further credit form any source.

Sell and rent back is also an option. Although there is likely to be a noteworthy discount on the property’s true market value, there is the luxury of being able to stay in your own home whilst sorting out your finances. There will usually be a buy back option available in the agreement, which allows the client to purchase their house at the rate of the new mortgage. The real advantage of sell and rent back is that it negates the usual peripheral problems of raising capital via a house sale. As their is the option to stay on as a tenant, there will be no need to look for a new home, change schools for any children or even search for a new job.

The biggest advantage that sell and rent back affords, is the ability to stay in your home whilst consolidating debt. The peripheral benefits of this are numerous, as it prevents the need for a stressful move, changing schools for children or even a change of job. The long term benefits of preserving your credit history have previously been mentioned and the short term loss may be prudent when considering the loan term gains.

Sell and rent back companies usually offer a buy back option. The buy back is based on the new mortgage arranged by the company. This allows the client the option of once again becoming owner of their own home.

Unfortunately, the credit situation as it is has forced many people into a financial corner. Creditors have become more and more vociferous in their pursuit of monies owed, governed by the fear of the credit crunch. Repossession orders have increased greatly in the last couple of years, rising to over 120 per day in 2008. In reality, this is not desirable for the lenders as it prevents them from recouping their interest.

Until the market is willing to admit to a fall in house prices an adjust accordingly, the financial difficulties people are facing will not be going away anytime soon. Sell and rent back is not designed as business model designed to rob people of their homes. It evolved out of the pressures created by an irresponsible lending climate, looking to cash in on the massive growth in the property market.

Sell and rent back is not only for people who find themselves in financial difficulty. It is often used as a way of releasing equity from your home, insuring an expedient purchase after a divorce or consolidating debt. It can be open to abuse due to its current lack of regulation, but the reality is that it is in the best interest of the sell and rent back company to uphold it’s agreements. The sector is growing rapidly and will soon come under the jurisdiction of the OFT. Until then, if sell and rent back is an attractive option, ensure that the company you are dealing with is reputable, do your research and be sure you fully understand the intricacies of the business.

The much publicised property slowdown and credit crunch has forced many homeowners into difficult situations. The cost of living has risen dramatically in the last couple of years and the credit crisis across the pond has only added to the mortgage problems that many people are facing.

As a result many homeowners are finding that their income is no longer significant enough to deal with the mounting debts that accompany their mortgage repayments. Unfortunately this often leads to the homeowner needing a quick sale in order to raise the necessary cash to cover their debt. In the present climate, a quick property sale has become more and more unlikely.

The market situation and new financial difficulties faced by the public due to the American credit crisis has resulted in a growth spurt of sell and rent back companies.  Their encroachment into the property market has not been welcomed by all, especially estate agents and debt consolidation companies. Homes sold under a rent back scheme do not involve estate agents, as the property is sold directly to the company specialising in cash purchases, which obviously bypasses an estate agent fee.

The cash purchase element of sell and rent back also infringes upon the territory of debt consolidation companies, as it would negate the need for a homeowner to take out a loan that is secured against their house.

There has been a lot of conjecture surrounding sell and rent back companies, especially in the press. As a new element of the market, there is still some doubt and suspicion regarding the motives of these companies.

The industry is not currently regulated. As a result, a small number of business are setting up with the intention of capitalising upon the difficulties of others by leading them to believe they have the rights of a tenant and then selling their homes from under them when a better offer comes along… (cont)

In the simplest terms, BMV is an abbreviation for Below Market Value property. What this means is that the prospective buyers pay less than the expected market value for a property. There is a section of the housing market that specialises in this area and they usually offer a sell and rent back option (at market rent) to the seller, often with a fixed term lease.  

Companies specialising in BMV property usually offer a minimum of 80% below expected retail value. Valuations are normally free and are estimated by examining the local market trends.

There are a number of reasons that people decide to sell their property at below market value. BMV sales are generally paid in cash and offer an expedient sale. Currently, the general turnaround for a house sale in the UK is 7 months and BMV sales can be completed in 24 hours. Also, companies that specialise in this area tend to deal with all aspects of the sale, including dealing with the mortgage lenders.

The rent and sale option is often utilised by people in financial difficulty, as a way of consolidating debt. The main reason for this being that it offers them the security of their own home whilst repairing their financial situation. Repossession orders have increased year on year as Britain attempts to deal with the spiralling cost of living. The advantage of a BMV sale is that it can stop a repossession order and, probably more importantly in the current credit climate, prevents the seller from acquiring a bad credit rating. The CML has recently highlighted that lenders are finding the credit crunch severely limits their members ability to advance the money for a mortgage. A bad credit rating in the current climate may prevent home buyers from achieving a reasonable interest rate.

In simple terms, Sell and Rent back (or Rent and Sale) is when you sell your house and then rent it back at a rental price affordable to you. Typically the reasons people choose to sell and rent back are for equity release, debt consolidation or motivated selling. In most cases, sell and rent back schemes will have a buy back option for the tenant, at the rate of the new mortgage.

The ability to sell your house and rent it back is a viable alternative to equity release schemes, especially if there is a need to generate cash quickly. There may be a case where you are looking to start a new business and need immediate funds as start up capital

The economic slowdown has forced many homeowners into defaulting on their mortgage and has put them at risk of repossession. IVA’s have increased year on year and debt consolidation companies has become an ever present part of the UK’s economic landscape. The advantage of selling and renting your house back, is that you are guaranteed a quick sale and the security of a roof over your head whilst attempting to deal with your financial situation.

For example, if you were looking to sell your property and emigrate overseas, an expedient sale not only releases the required funds, it also gives you the option to rent back for a certain period whilst searching for your new home. The same applies if you are looking to start a new business overseas, also providing a certain amount of flexibility if you decide eventually that you would like to emigrate as well.

Sell and Rent Back in London has been steadily increasing due to its position as the focal point of the economic market. Comparatively speaking, house prices and the cost of living have grown exponentially in London. Debt management is now of growing concern to people in the capital.

The vast majority of Sell and Rent Back companies are based online. The advent of the Internet and World Wide Web have caused many people to ask, “Should I sell my house online?.” The advantages being easy accessibility to the company and a vast array of choice. However it is important to be happy with the company you choose. The need to sell a house quickly often leads to bad choices. Do your research and look for a company that will sell your house online professionally and takes your personal situation into consideration.

Insurance is one of those areas where it seems people are only too ready to stick their heads in the sand and adopt the ‘it’ll never happen to me’ attitude.  It’s not hard to see why this happens; for a start there are few of us who enjoy dwelling on the potential disaster that may or may not be around the corner, and in any case if money is tight insurance is often the first item of expenditure to be sacrificed.

One area of insurance that is particularly neglected is that of income protection, which provides cover should you not be able to meet your mortgage repayments due to ill health, disability or accident.  If you are a fit healthy 30-something, the chances that you will become seriously ill are probably remote but what people often fail to think about is that accidents can happen at any age.  It’s easy to think of ourselves as invincible but disaster can and does strike – thankfully rarely – so it makes sense to have a plan in place that will offer some sort of protection for you and your family.

When you are young your mortgage repayments will probably be among the most significant of your monthly outgoings.  If you find yourself unable to pay your mortgage, whatever the cause, you stand the risk of losing your home through repossession.  The number of repossessions is on the increase and mortgage lenders are unlikely to turn a blind eye in a situation where they can see little hope of getting their money back.

If you are already in this situation and you don’t have an insurance policy that will pay out, is there anything you can do?  With Property Rescue there is another option.  They will assess the value of your property and will make you an offer.  This means that you have a guaranteed buyer for your home that will allow you to pay off your debts.  “But where will I live?” I hear you ask!  Using the ‘Rent Back’ scheme, Property Rescue allows you to stay in your own home as a tenant rather than as the owner.  This means you don’t need to relocate, disrupt your family or move away from a neighbourhood that you enjoy.  Although you won’t own your home any longer, you won’t be threatened with eviction whilst you can afford to pay rent and if you think you are likely to be in a position where you can become a home owner again in the future, Property Rescue will give you the option of buying back your property at an agreed date and an agreed price.

Health and wealth are most definitely connected.  Poor health can strike at any time, usually through no fault of the person concerned, and yet it can bring a great deal of suffering to the individual and his or her family.  Don’t let illness or accident threaten your way of life more than it has to. 

Contact Property Rescue today to find out more about their Sell and Rent Back scheme.  Their experts are always pleased to have an informal discussion over the phone and will arrange to visit you and value your home at no obligation.

Did Christmas leave you with the type of hangover that can’t be cured by a couple of aspirins and a cooked breakfast?  If so, you’re not alone. 

The Financial Services Authority carried out a pre-Christmas survey that showed people were more likely to resolve to go on a diet or book a holiday in the New Year than try to deal with the bills they’ve run up over the festive period.  Apparently as many as one in ten shoppers were still paying back last year’s Christmas bills whilst running up further debt on their credit cards to finance this year’s purchases.

The post Christmas period is the busiest time for debt counselling organisations, whilst websites that deal with debt problems have a significant increase in visitor rates during January.  The Association of Business Recovery Professionals is seeing a record number of people getting into serious debt problems, with some of them having no option but to go down the route of insolvency or bankruptcy, running the risk of losing their homes and putting enormous strain on their relationships.

All these organisations stress the importance of having a debt repayment plan to break the cycle of debt, something that Property Rescue would endorse.  Even in cases where levels of debt are high, having a proper plan in place, which is agreed by both you and your lenders, is bound to help avoid County Court Judgements being served against you and will lessen the risk of losing your home.

Home repossession is a huge trauma to any family.  The disruption to normal life caused by children having to change schools, adults moving away from neighbours and friends, losing the support network offered by nearby family, and downsizing to a smaller property or inferior neighbourhood all take their toll.  That is all in addition to the financial problems, which are often far from over even once the house has been repossessed by the lender.  Credit ratings will inevitably suffer and new credit, including mortgages, will be hard to come by.

Even when debt problems seem overwhelming, it does not necessarily mean that you need to forgo the home you love in order to pay back what you owe.  Property Rescue’s sell and rent back plan provides one option of dealing with the situation, allowing you to stay in your home as a tenant after the sale has been completed and your debts have been paid.  Property Rescue always carry out discussions in complete confidence and promise to make a ‘no obligation’ offer on your property.

Don’t ignore debt problems because they won’t go away.  If you have levels of debt that are mounting and your home is under threat, call Property Rescue without delay.

As we approach the end of the year it is a good time to look back at the property market during 2007 and look at the current situation.

The year began with what had become a familiar trend of rising prices, which, it seemed, would go on for ever.  But it was not long before some commentators and financial experts were warning of potential slowdown or even disaster in the months and years ahead.  The credit crunch in the US sent shivers through the economy, the effects of which are still with us today and likely to continue for a while yet, whilst bank interest rates rose and mortgages followed suit.  By mid year we were seeing a general slow down in property prices all across the country and in the final quarter of the year prices have begun to fall.

November saw a 1.1% drop according to the Halifax – the 3rd consecutive month of falling property prices.  The Bank of England lowered its interest rate by one quarter of a per cent at its meeting in early December but the effects of this rate cut seem to be limited.  Lending between banks has become very expensive and the Northern Rock crisis has done nothing to bring confidence back to the markets.

As if this weren’t enough, some commentators are predicting that the change in capital gains tax rules, due to come into force next April, will bring a lot of ‘buy to let’ properties back on to the market as investors seek to capitalise on their gains.  The net result of this could be a ‘buyers’ market where the number of homes for sale pushes prices down.  If this prediction is realised, those who took out mortgages during 2007 could find themselves in negative equity situations.

If you need to sell your home fast but can’t find a buyer you might, justifiably, be concerned about what will happen to the market in the months ahead.  For a guaranteed quick sale speak to Property Rescue, who will make an offer on your home within a matter of days, or in some cases just hours.  The price they offer will be a little below market value but it will include the legal fees on your sale, and will avoid the need to prepare a Home Information Pack, which could save you hundreds of pounds.

Property Rescue will be happy to talk to you in complete confidence and make a ‘no obligation’ offer on your property.  If you then decide not to proceed that will be the end of the matter – no salesmen will call, nor will you be pestered by phone calls.  Talk to Property Rescue and sell your property…fast!