Interest rates keep going up and recent data is showing that many are struggling to cope. Repossessions have gone up 14% on last year as the interest rate rises take their toll. So what can a Homeowner do? Well before needing to sell their house most people can look at reducing costs elsewhere in their life. Can you cancel the Sky subscription, get rid of the car, or cut down on luxuries? Another way to afford the higher mortgage payments is to see if you can get a better mortgage deal.The good news is mortgage companies are being firercly competative at the moment and many of the interest rate rises are not fully working their way through to the mortgage rates.
However if you have already tightened your belt and are still struggling to meet the mortgage payments then these options are not open to you. The first thing I would suggest is don't get into a situation where you miss mortgage payments. Your Credit file can follow you round for many years after this making it impossible to get finance, rent a house (most agents do credit checks), or in some cases get a job (employers like the Police, and those involved in financial services look down on a bad credit history). But getting bad credit it can have a detrmental effect for years to come, all due to a small period of your life when you struggled.
It leaves most people with only one option, which is to sell the house. For some people selling their house and downsizing may be a way in which they can get a home with no mortgage and as such no longer be at the mercy of interest rates. For others it may be as simple as going somewhere with a lower mortgage that they can afford. For others they might wish to go and rent a property as rents are currently very low in relation to house prices.
The problem with many of those options is that you have to sell the house that you may love. This however might not have to be the case. A new form of property investment companies are offering to buy houses and rent them back to the seller. This means that the seller has paid off all their secured debts and may even be left with a tidy sum of cash from the equity and they still live in the property that they originally bought. On top of that all the maintenance of that property is the responsibility of somebody else further saving you money. You do have to be wary though, there are rumours of a few of these companies are buying the house's promising rent back deals, then kicking tenants out after six months and selling the house. This market is currently unregulated and has many small one man bands. There are a few large companies in this area who do have codes of conduct and the people who work under the umbrella of these companies will be penalised if they do not act in the correct way. I would suggest getting references from anybody who is buying your house and renting it back. Most will be able to suppy you with names and numbers of people they have helped in the past and many will be still people who rent off the landlord. This way you can hear wheter importnat maintance is done and whether the landlord is fair and reasonable. Another way to check creditability is to which orgainisations do they belong, a landlords association and registration with the local authority can only be seen as postive things. Finally though you have to be comfortable with the person who is offering to buy your house, after all if you intend to rent back you are going to have a long term relationship with this person.
Understand as well that you don't own the house any more and as tenant who can eventually be asked to leave at the end of the tenancy agreement.Whatever you do the main thing is to take action now if you find yourself in this position. The money markets are expecting further interest rate rise's as the bank of England struggles to keep inflation down. We at the moment going through a degree of lux within our economy. With many companies losing lots of money from bad US loans and a fall in share prices we may see job cuts around the corner. Coupled with high interest rates this could turn into a nightmare for people with mortgages they are struggling with now.
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