Sell And Rent Back Property - Who Benefits?

There are many companies online now offering you the opportunity to sell your home and rent it back, in order to free up some equity and help with your debt management. Is this the right thing for you to do? Well, you have to consider it in detail.
Bad debts and rising interest rates has meant that homeowners are turning to sell and rent back companies who help make it sound like they can ease the financial strain.

Sell and rent back agreements allow homeowners to sell their property at a discount price to a company, which will then be rented back to them at market rate. The only problem is, you will end up selling your home for much less than it is worth, in order to get a quick financial fix and pay off any debts that are hanging over your head. Everyone knows how valuable an asset property is, and even as house prices fall, your home will still be worth a considerable amount.

However, please be careful if you are considering sell and rent back. There are many unregulated firms out there who will aim to profit from your misfortune. Do your research and ask around with families and friends. I think it was once a bit of a taboo to discuss your financial worries, but in our current climate there is no need to be ashamed anymore, since nearly everyone else is feeling the pinch too. Sharing your struggles might help ease the stress.

Have You Considered a Debt Consolidation Mortgage?

A debt consolidation mortgage is another term for an adverse credit mortgage, which may be used for this purpose. It may be interesting to note that many of the people who take out a debt consolidation mortgage are remortgagers who are trying to get their finances in order.

Basically, if you have a mortgage and yet also have financial problems, then you may look for an adverse credit mortgage to help sort out your personal finances. There can be many reasons for ending up in financial difficulty, not least with the credit crunch hitting us hard, so a debt consolidation mortgage might seem like the only way out to fix your finances and wipe the slate clean.

Many consider a debt consolidation mortgage as the first step to correcting their credit status. In the past year, the number of people taking out loans for this purpose has risen, and this may be because of the overall debt situation in the UK. Therefore, it is clear that some people who get a debt consolidation mortgage use the chance to use some of the equity in their home to repay existing debts.

Everyone has their own way of dealing with debt, but i suggest that is exactly what you do - deal with it; face it head on and don't brush it under the carpet and think it will go away, because it won't. There can be light at the end of the tunnel, but make sure you search for it.

Mortgage Debt And The Fear Of Repossession

When you take out a mortgage, naturally you then become in debt. It is a loan you are taking out and therefore has to be repayed. I think some people forget that a mortgage debt is still a debt, yet it is slightly different to a normal credit card debt, for example.

With a mortgage debt, you have to ensure that you keep up your repayments on the home you have, otherwise it may be repossessed.

Repossession is a drastic move, but sometimes it is the only way for lenders to claim back the lost money. In August 08 it was reported that the number of homes being repossessed has risen by an incredible 24% since 2007. These are worrying figures which mean people have been attracted by the offers of 100% mortgages which they can then not repay.

Lets just clarify the repossession process. It does not always mean that the mortgage holder loses their home. It is more a case of when the court grants an order for for the possession of a home. This process can actually be abandoned if the mortgage lender and borrower can come to some sort of agreement for a repayment deal.

In the second three months of 2008, mortgage possession claims grew by grew by 17%, compared with the same period a year earlier.



MORTGAGE POSSESSION ORDERS MADE - Source: Ministry of Justice




I think this shows just how big a mortgage debt can be, and taking out a 100% mortgage that you can't afford just isn't recommended, nor is it likely to be something offered by lenders anymore.

Debt Advice - Help Is At Hand!

We're all struggling to keep our head above water in this state of financial gloom, but if you are buying a property then it is worth knowing what sort of debt you will be in and for how long.

When taking out a mortgage, the debt that comes with it is a scary thought. Many seek debt advice and feel that it is essential in alleviating the financial stress that comes with taking a mortgage out. It can also put pressure on your relationship with your partner with whom you have the mortgage with. Financial problems are one of the biggest causes for the break down of a marriage / relationship. It is no wonder that people are seeking debt advice to cope with it all before it gets seriously out of hand.

One of the best places to get free debt advice is by calling the National Debtline on 0808 808 4000. They provide independent financial advice and may be able to offer a solution to your financial worries. It is FREE, CONFIDENTIAL and INDEPENDENT advice.

Be careful who you turn to though, as many will try and convince you that if you owe a lot of money to various companies, then the best solution is a debt consolidation loan, but this is not always the case, as my previous post on debt consolidation indicates.

It can be hard knowing who to trust when it comes to debt advice, but ensuring you stay one step ahead of the game will help alleviate any nasty outcomes.

Debt Consolidation - The Right Help?

If you are in a considerable amount of debt due to all sorts of loans, then debt consolidation might seem like the best option. Let me share my friend's experience with you.

My friend got into bad debt when he was injured through a roofing accident. He had to give up work and wait for an operation on his back. In the meantime, he needed cash and there was only one solution. He decided to take out a rather hefty loan to cover his losses and pay his rent etc, but this soon spiralled out of control. With £20,000 worth of debt, the only solution for him at the time was to try debt consolidation. The rates seemed attractive and it was his only way out. That was 5 years ago, and now that he has been back in work for 3 years, he is still paying a hefty amount to his debt consolidation company on a monthly basis. This will be ongoing for at least the next 10 years.

I think it is a shame that people feel so helpless that we have to let the debt consolidation companies take over, but for some it is the only way out.

I had a look at Martin Lewis' - The Money Saving Expert - blog on his website, as he detailed the debt consolidation problems facing many of us. He claims that consolidation for consolidation’s sake is ridiculous. Debts at 4%, 2% and 1% are not worth consolidating into a loan at 33%. I do see his point, and it is worth thinking about.

Martin Lewis believes that the two prime considerations for those in debt crisis (regarding the debts themselves this is) should be:

a) to reduce the cost of the debts

b) to ensure the monthly repayments are manageable.

For more information on Finance, check out my other blog: Guide to Finance