Should I Sell My House To Pay Off Debt?

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Should I Sell My House To Pay Off Debt?
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Your home is often your most valuable asset, selling it can be an effective way of paying off debts that are giving you sleepless nights. But this isn’t a decision that should be rushed and there are lots of things to consider before putting it on the market.

If you decide to sell your house fast and need funds in your account as soon as possible, we can buy it in just seven days. We’ll also give you a guaranteed completion date so that you know exactly when the money you make from a sale will be with you.

Dealing with your debt first

There are several charities that will support you if you are struggling with debt. They will help reduce your spending by improving your budgeting and make sure you’re receiving all the benefits you are entitled to. They can also arrange a debt management plan to reduce the amount you are repaying to the people you owe money, known as your creditors.

Because a mortgage is a secure debt, which is low cost and attached to an asset that could rise in value, they will try to clear all your other debts in a way that enables you to make your mortgage repayments and keep your home. That means, for example, store card or payday loan debts will be tackled first.

If you are finding it hard to pay your mortgage, your provider may be able to help by giving you a mortgage holiday or switching you to an interest only mortgage. In some situations the government can help with your mortgage interest payments.

In more severe cases a charity can help you set up an individual voluntary agreement (IVA). This is a form of insolvency that allows you to keep your home while paying creditors an agreed amount you can afford. The next step along is bankruptcy, when you can no longer contribute to your debts – in this situation you are likely to be forced to sell your home.

Thinking about selling

If these options aren’t right for you and you’re keen to sell, there are still lots of factors to consider before going ahead:

  • Could you let your property out and rent a cheaper home elsewhere? You may be able to cover your mortgage and make a little extra to help with other costs.
  • Do you have somewhere else to live? You shouldn’t move out of your home until you do.
  • Do you have a poor credit rating which could prevent you from getting a mortgage in the near future? It may be hard to get back on the housing ladder if you do.
  • Is your home in negative equity? This means it is worth less than the mortgage you have on it. You will owe your lender the difference if you sell, so it might be worth staying if you can.
  • How much equity is in your home? That’s the proportion you own without a mortgage. Will it cover all your debts or would an IVA be a better option?

When the time is right

Sometimes, however, selling a home is the best way to get on top of your finances and bring you some peace of mind. If you have enough equity in your property to pay off what you owe with some leftover to start afresh, it is a tempting option. Equally if you are struggling with large mortgage payments, stopping them and moving somewhere more affordable will help prevent you from going into debt.

The upkeep of a large property may also be a burden if your circumstances have changed and your income has reduced. Downsizing to a smaller home will make your outgoings more manageable.

For some, selling a property is a way to avoid more drastic measures. If your home is in danger of repossession it is often better to sell it than hand it back to your mortgage lender. They will look to recover the money they have lent rather than get the best price, which means any equity you had in it will be reduced. You will also continue to be responsible for your mortgage until the home is sold, and the mortgage company will take the legal costs of repossession and the sale from the proceeds.

If you are considering bankruptcy, bear in mind you’ll probably be forced to sell your home as part of the process, unlike the IVA mentioned above. As a form of insolvency bankruptcy will also remain on your credit file for six years making it harder to borrow money.

Selling quickly

Once you’ve decided to sell you’ll need to work out the best way to do it. If you’re able to wait, putting your home on the open market with a traditional or online estate agent is likely to achieve the best price. However sometimes you need to move at a faster pace, which is why many people choose to work with us.

Our goal is to buy your home as quickly and with the least fuss as possible. We’ve been doing it for more than three decades so know how to move the process along swiftly, while taking on much of the administration and stress of a housing transaction. We’re also used to working with people in unsettling situations such as divorce and inheritance. In addition if you own other properties, we can help facilitate a quick sale there too. Selling a house with tenants can sometimes be a good way to help service debt and still keep tenants housed.

We give you the certainty of when, and for how much, your home will sell so you can move on quickly. What’s more, we cover the costs of solicitors and there are no estate agent’s fees to pay. If you’d like to find out more, please get in touch for a chat.

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