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Paying Off Debt Through Downsizing?

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Paying Off Debt Through Downsizing?
  • Free cash offer within minutes, no legal fees, any location.

Downsizing is moving from a larger property to a more minor, manageable asset. You could be doing this for various reasons, from poor health, challenging upkeep, or excessive overheads. These overheads may include a mortgage that is causing challenges in your daily life.

You need funds quickly; if so, WeBuyAnyHome Experts can help. You could have the cash within your account in seven days; try selling a property typically, and you be waiting months!

If you think we will give you a lower than the market price, you’d be wrong. We give you a FREE, no-obligation offer over the phone and validate it within 24 hours with a site visit from our specialists. In addition, your offer will be based on homes in your area, so you know you’re getting fair value for your residence.

Let’s Talk About Your Debt

Selling a home is a significant occurrence in anyone’s life, and that’s particularly true when you have debt associated with the property; how can you deal with it effectively?

It may be that you are continuing to rack up debt and passing this over to the property, and the situation is becoming untenable. As soon as you realise you’re on a slippery slope, get help. Many debt charities can help provide you with advice. In the UK, you may wish to consult free specialists at the Citizens Advice Bureau (CAB); these are generally found in most towns and cities.

After seeking help, you will be given a debt management plan (DMP) based on your incoming and outgoing finances. Then, you’ll be given a budget and advice on making life changes to get out of debt. The CAB, for example, may also offer free legal advice on specific issues such as credit card debt or issues with payday loan repayments, loan sharks, and likewise.

If your financial issues are severe, you may need to consider an individual voluntary order (IVA). These legally binding contracts can last between five or six years when you are declared insolvent and have to pay back creditors with whatever is within your means.

Technically you don’t even need an IVA to do this so long as you show your willingness to pay back what you can do and tell your lenders your challenges. However, if you’re in this state, you need protection from creditors and property collection, so getting an IVA is far better.   

Your Decision to Sell

What if you don’t want to use one of the options above? Well, you can sell your assets such as property and pay off your debts. This option can be helpful for you to sleep better after honouring your commitments.

You could opt to downsize to a smaller property and get another mortgage after clearing your debts or rent. But remember, if you’re renting, you’re not using your money to generate wealth.

If you’re considering downsizing, there are a few questions you need to ask yourself:

  • Does the property have enough value to cover all debts after paying the mortgage?
  • Will you be able to buy a smaller home by having a large enough deposit? If not, can you retain enough money to rent? If still no, you may need to consider an IVA to protect yourself from being made homeless; seek professional help.
  • Can you arrange a mortgage? If you have a poor credit history, this may limit you to high-interest mortgages and loan sharks; avoid both.
  • Have you factored in all costs when selling a home and buying a new one? These costs include stamp duty, solicitors fees, surveyor fees, moving and renovations charges.

Once you’ve decided to sell, there’s one major problem; that’s the time it takes actually to sell a property. Some stay on the market for months to years. To help expedite a sale, you can lower the price, renovate, or add value to the property through features.

Yet, if you have debts, odds are none of these are viable options. To stop your debts stacking up over time, a good idea may be to use a home buying company.

WeBuyAnyHome Experts is the largest home buying company and can offer you the going price for your property. We achieve this by bundling up all the costs of our specialists and services and integrating these into the sales price once we own the property. We have cash reserves and don’t care about timeframes; this is how we make our money.

Within seven days of contacting us, you get the property’s market value transferred to your bank account. This bonus can be a lifesaver in a tide of uncertainty when you’re in mounting debt.  

After Downsizing, What’s Next?

If downsizing goes well, you will be in a far better position to manage your finances. Life starts getting back to normality. If your debt is still present, you may be able to barter with each lender to provide them with a lump sum and have the rest of the debt written off. Credit card companies usually take the offer as they find it financially punitive, going after smaller debts.

What Happens if you have Negative Equity?

Many people that find themselves in financial trouble first try to refinance their homes, get second mortgages or implement something similar. If you have negative equity, it usually means your mortgage debt is larger than the property’s value.

This could be the result of being from the interest decided upon with the lender. No matter the cause, there are still ways forward with a new property, but there will be steep demands.

Most lenders never provide negative equity mortgages, but some do. Here you may also come across lenders that are legally compliant loan sharks, so keep your wits about you. You will need to hit every repayment without fail and ensure that you’re not hit with early repayment charges when leaving your current mortgage.

In these situations, some of these lenders offer to become a 3rd party that is named on the mortgage as a primary payee. In your contract, it’s likely you’ll only own the property once full payment has been met; this may also stop you from moving without paying them back first.

Contact Us

WeBuyAnyHome Experts can offer you a fast way to get market value for your property without gouging your bottom line for the service. We pass all our fees on to the future buyer when we decide to sell the property; this helps you during unfortunate times. Taking this step allows us to sleep better at night, and if we can help you do the same, that’s even better.

Call us for a no-obligation FREE property offer that will be verified within 24 hours by a site visit if you opt to proceed. You lose nothing from asking, and we can answer any of your questions. If you decide that we can help you, we’ll transfer money into your account within seven days of our initial phone call!

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