Your credit record is used by lenders and credit providers to decide whether you are reliable enough to be given credit, and, as such, it is vital to have as good a credit history as possible. A good credit rating will mean that you will be able to borrow money, and at more favourable terms then those with patchy records.
Selling your house can be very stressful – the process can take a long time, and there is always the risk of getting stuck in a chain, meaning that you are dependant on your buyer selling their own house before they can complete the purchase of yours. There is also the risk of a chain breaking down at the last minute because their own property sale has fallen through, which means you have to start all over again.
Over the last decade investing in property has been a hugely profitable strategy. Those who bought investment properties in 1996 were purchasing an asset with a gross yield of more than 9% financed with borrowing at interest rates below 7%.
Many UK homeowners with patchy credit histories may be forced to sell their properties on the market next year, as lenders get tough.
Should you sell and rent back?
With rising interest rates, more people are getting into mortgage arrears recently; while the number of repossessions is tipped to rise next year. Here are ten steps to help borrowers stop mortgage arrears from building up and risking repossession.
According to the FT, the number of companies offering quick house sale solutions has increased dramatically over the last couple of years. There are now more than 200 companies that offer homeowners a fast house sale. This figure has risen from around 25 property cash buying companies about a year ago.
The number of companies offering quick house sales has increased recently, and there are now over 200 such companies in this sector, up from around 25 just a year ago. So why are people looking for a fast house sale?
There are many people and companies on the internet that advertise themselves as a property cash buyer and, if you are looking to sell your house fast, it’s important to be aware of the differences between them.
House repossessions rose in the first half of the year, by 30% on the same period in 2006, indicating that some homeowners are struggling with the five recent interest rate rises.
The figures are from the Council of Mortgage Lenders, the industry body, which laid the blame on two factors:
How to stop a house repossession if you have fallen behind with your mortgage or any other loans secured on your home and you are under threat of repossession. There are a number of ways to deal with the problem:
How you deal with your debt problems depends a lot on both the size of the debt, and the extent to which the problem has been allowed to build up. For smaller debts, making a few cutbacks may be enough, but more serious debt problems require more drastic action.
Do the maths
To start to deal with the problem, you will first need to sit down and work out exactly how much you owe. Not facing up to the problem means that you will start getting County Court Judgements and worse. As a rule of thumb, if your debt repayments take up more than a fifth of your budget, then you are in the danger zone.
Repossession figures do not give a true picture of the extent of the national debt problems, as many homeowners with debt problems are opting for fast house sales in order to avoid repossession.
This is the verdict of litigation specialists Moore Blatch. They say that, while the numbers of homes that are repossessed often hits the news, this fails to account for the hidden majority that are sold before the repossession process reaches its conclusion.
Sub-prime mortgages are set for strong growth in the UK over the next four years, according to market analyst Datamonitor.
According to the Bankruptcy Advisory Service, people are beginning to seek bankruptcy at a younger age, and their debts are getting bigger and bigger.
With the UK increasingly faced with a mountain of debt, last month the Bank of England announced that the country’s consumer debt had reached a massive £1trillion many are inclined to blame people not managing their money properly, or being shopaholics.
In addition, some point the finger at householders who have overstretched themselves to get a mortgage the Council of Mortgage Lenders said banks will lend an extraordinary £360billion in mortgages before the end of 2007.
Proposed changes to the legal aid system may mean that solicitors will be reluctant to take on cases for clients who are threatened by repossession.
Greenwich Housing Rights, a charity which provides free legal advice for people with housing problems, has expressed concern that new government legislation will mean that solicitors will be reluctant to take on such cases in future.
The number of complaints to the Ombudsman for Estate Agents (OEA) rose by 41% to a total of 8,472 in 2006.
As a result, 586 cases were referred for formal review and resolution. 18% more than in 2005, though the largest number of complaints to the OEA occurred in 2002.
If you find yourself in severe financial troubles, the only solution to the problems may well be to sell your assets. For most people, the main asset of any significant value will be a house or flat.
When this property is your family home, this can be a very difficult decision to have to make. The thought of having to give up your biggest asset is bad enough, but when that asset is your home as well this makes the decision even more difficult.
A broken property chain is one of the most stressful and annoying experiences for people looking to buy or sell property.
In many property deals, the various buyers and sellers are linked to each other, with one transaction often dependant on another. If one buyer or seller backs out of a deal, it can have disastrous effect on the whole chain.
If you are selling inherited property, there are a number of decisions to be made. You may wish to live in the property yourself, rent it out or sell it. There may be taxes to be paid on the property you inherit, or you may have jointly inherited the house or flat with others.
According to the BBC only 4580 homes were repossessed by mortgage lenders in 2019. This represents the lowest number of repossessions since 1980.
However, the most recent government statistics show that mortgage repossession claims (the first stage towards repossession of a property) have started to rise from a low base in 2015. This may well translate to more repossessions in 2020, so what can you do to stop the bailiffs knocking on your door?
Though house price rises in the majority of the country are beginning to slow down, the London housing market continues to rise, as demand for property in the capital shows no signs of slowing down.
For those currently renting property, and first time buyers looking to get onto the housing ladder, the slowing of house price inflation around the country will be welcome news, though the Halifax reports that, for key public sector workers, 70% of towns are out of their price range.
With recent interest rate rises three in the past six months are more planned more people are beginning to struggle to meet mortgage payments and, in the worst cases, battling against repossession.
Research by the Halifax has revealed the difficulties faced by public sector workers, and first time buyers in general, finding that these groups are priced out of up to 70% of Britains towns.
Of all the problems involved in separation and divorce, sorting out what to do with the matrimonial home can cause the most anxiety, as the family home normally represents the largest asset a couple own.
More than 150,000 marriages in the UK end in divorce every year, and Norwich Union believes that up to 35% of these couples are forced to sell their house or flat to cover the cost of their divorce.
Even in cases where one or other partner gets to keep the house as part of the divorce settlement, they may not be able to afford the upkeep of the house, bills, mortgage payments, and council tax with only one income.
The dramatic rise in house prices over the last few years has raised the divorce stakes even higher. In some areas of London a house worth £70,000 in 1993 is now worth upwards of £400,000.
Increasing numbers of wealthy older people are choosing to sell their homes and rent them back. Letting agents report that they are seeing more over-50s choosing this option.
The desire to free up cash to enjoy life is one of the reasons for this trend of selling to rent, or the fact that children have left home and the house is too big. In addition, many want to avoid the prospect of avoiding leaving their families with a large inheritance tax bill.
According to research from Key Retirement Solutions has revealed that a quarter of homeowners over the age of 60 still have outstanding mortgage debt.
Buying a house, along with divorce and the death of a loved one, is one of the most stressful experiences life can throw at us. When a buyer wants to sell their property it can result in a number of properties being dependant on one another. If one sale falls through, it can scupper the whole chain.
A recent Times column by Stephen Gerlis, a District Judge at Barnet County Court, looks at the risks people in debt face, and the powers that creditors and courts have to take steps to recover that debt.
With 10,000 people going insolvent every month, a 65% rise in mortgage repossessions, and the UK’s population in a combined £1,300bn of personal debt, the county courts are kept busy.
The BBC carried a story recently on a Torquay woman who lost out on £22,000 after her flat was repossessed and then auctioned by receivers.
The flat was sold by receivers at an auction in London for just £60,000, but just six weeks later it was sold on at another auction for £82,000, meaning that Mrs Smith lost out on £22,000.
This practice, which is standard for borrowers who are unable to stop the repossession of their homes, reveals how some borrowers fail to get the best price for homes when the worst happens, and they are unable to meet mortgage payments.