Archive for Mortgage Payments
Jan
25
How Do Quick Sale and Rent Back Companies Work?
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For those people requiring a quick sale or wanting to sell and rent back their properties there is now a whole plethora of specialist homebuying and rent back companies to chose from. The problem is that until regulation comes in (which will hopefully be shortly after the FSA have finished their investigation in the practices and best way to regulate the sector) then many unscrupulous companies will be allowed to exist.
How does the quick sale process work
The home buying company will buy your property directly from you. They are not an estate agency of middleman and they take full ownership of the property. They will typically offer you between 75-85% of the market value of the property in exchange for a quick (4 weeks or less) guaranteed sale. They will then rent out the property or sell it on.
Given the buying and selling costs are about 5% each then these companies may only make 5% profit on each property if bought at 85% and less if they can not sell it for months. This is why they need to buy at a discount.
How does rent back work
If you need to sell but want to stay in your property (i.e. because you need to pay off arrears or avoid repossession for example) then renting back your property could be the ideal solution.
This involves you selling the property to a specialist company and then them renting it back to you (most home buying specialists offer this service). The sale price will normally be between 75-85% of its market value just like in a quick sale situation.
The rent you would be charged would be similar to the market rent of that property. This rent normally works out less than previous mortgage payments and loan outgoings so that the person stays in the their property and reduces their outgoings.
When you rent back your property will most normally be on an assured shorthold tenancy agreement (AST). This is the standard contract between tenants and landlords. The maximum term of this contract can only be 12 months so it is imperative this has a clause added to this agreement giving you the right to renew this contract on it expiry. They should also specify how much the rent will increase each year (normally with inflation or set % amount).
A good company will insert a right to renew clause in the tenancy agreement. This gives the tenancy the right to renew their tenancy each year as long as conditions are met (i.e. the rent is paid, the property is kept in satisfactory condition).
Be careful which company you deal with
Anyone who says they can show you how to “Sell your property in 7
days or less for full market value” is LYING!! They just want to get into your front door and soon the offer of buying at full market value disappears. If you think about it, how could they make such an offer and make money as a business and why would they not just go to estate agents and buy up all the properties in the
windows? If it sounds to be good to be true it normally is!
Some unscrupulous companies have tarnished the image of sale and
rent back by evicting tenants when they did not want to leave. Please contact previous customers of the company and check online for reviews of them to make sure you are not dealing with such a company. Also check to see if they are a member of a recognised association which has a strict code of conduct such as the National Association of Sale and Rent Back (NASRB).
Why would a rent back company throw me out?
The vast majority of rent back companies love having previous owners stay in the properties for the long term as they do not have to advertise for new tenants each year and have periods when their property is empty.
In addition, sale and rent back tenants treat the property with great care as it still s feels like their house and not rented accomodation. They tend to respect properties better than normal tenants and most companies do not want to lose them.
Also, a good sale and rent back company will give some assurances about future increases in rent. For example, they may stipulate that rents will only increase with inflation each year or at the same rate as market rents. This should be in the contract. If not, there is a danger they could increase the rents massively each year to the point where it is effectively forcing their tenants out.
Option to Buy Back
Some companies will also give you the option to buy back your property at a fixed price in the future. This is agreed before you sell and this contract is registered at the land registry. This gives you a legal right, but not obligation, to buy your property at a preagreed price over a set timeframe.
Regulation of sale and rent back
The Office of Fair Trading are conducting a study that will determine whether existing consumer laws can keep homeowners adequately informed and protected, and could recommend that sale and rent back is fully regulated. Any further protection will be great for reputable companies and rent back customers.
Sell House Quick
Dec
03
What are my rights?
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I’m living in a privately rented 2 bed flat in London. We moved in in Feb 17th 2007 and our contract is for one year. For some reason, our landlord gets some of his mail delivered to our house, I recently opened one of his letters and discovered he was 2 MONTHS in arrears in his mortgage payments, does anyone know what rights I would have as a tenant if the house were to be repossessed?
Passive Income
Oct
18
Stop Repossession Now - Tips To Help You Keep Your Home
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Having your home repossessed is an extremely traumatic experience not to mention the effects it can have on your future financial circumstances.
There are many reasons why people fall behind with their mortgage payments such as redundancy, divorce or separation, bereavement & ill health.
In most cases of repossession the home owners have simply done nothing at all to try & get themselves out of the trouble they find themselves in & have just ignored all letters & calls from their lenders & just hoped the problem would somehow “just go away”.
The first step you must take to avoid your home being repossessed is to talk to your lender as early as possible when you get into difficulty. Explain your predicament to them and see if there is any way they can help you.
The solution may be as simple as giving you a “payment holiday” where they will suspend your payments for a set period whilst you sort out the underlying reasons for your inability to meet your mortgage payments. This will of course depend upon your exact circumstances but one thing is for sure, unless you speak to your lender they cannot help you.
Ignoring your lenders letters & calls is a sure way to set them on the course to apply for the repossession of your home.
You should also speak to the citizens advice bureau (C.A.B) to see if they can help you, explain your situation to them & they may be able to suggest solutions or put you in touch with someone who can give you free financial advice to help your situation.
A good financial advisor will be able to provide you with the steps you need to ease your financial predicament as quickly as possible.
You may be thinking that the repossession of your home will end your money worries in that it will relieve you of your mortgage burden. However your lender may try to recover the money you owe them by selling your property quickly at auction.
Your property may be sold well below its current value & could still leave a shortfall meaning you will still owe your lender. Another problem of repossession is the effect it has on your future financial situation, years down the line you may be back on your feet & be ready to become a home owner again, however you will find it difficult to get credit from credit or store card companies let alone mortgage providers because you have previously defaulted on an early loan.
Any credit you may get will come at a cost in that you will certainly have to pay higher interest rates than those who have a good credit history.
A solution to your problem may be to sell your property to a property trader, (as long as you have enough equity) quickly for cash to clear off your debts & prevent repossession.
You should get a better price from a property dealer than that which your lender would get selling at auction meaning you will have more cash to pay off your debts. This will also help with your credit history as you will not have defaulted on your loan.
Most property traders will also allow you to stay in your property as a tennant, meaning you not only pay off your debts but you also still have a roof over your head. They will also pay your legal fees.
Quick Property Sale
Sep
24
Should I Buy a Home or Rent, Which is Better?
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Should I buy or should I rent? This is a perennial question for those who want to move into a new home. While many people answer this question with broad generalizations, not backed up by actual facts and figures; the best way to determine whether you should buy or rent a home is to compare all the costs, factors and figures involved. Let’s take a detailed look at the question, comparing rental costs, mortgage payments, increases in home values and other factors which determine whether a person who buys a home gets a better deal than someone who just rents.
As an example, let’s compare renting to buying a $250,000 home with 5% ($12,500) down payment. Purchasing this property in Toronto would require about $6,000 closing costs and an approximate total of $2,000 per month which includes mortgage payments ($1,460), property tax ($150) and maintenance fees ($390). The rent on the same property is about $1,500 per month, therefore it would seem like it is easier to just rent the home instead of purchasing and to invest the $500 extra monthly payment, down payment and the closing costs.
The total investment growth from renting could be approximately $ 7,115 after 5 years. This was calculated by growing the monthly savings from renting ($500.00) plus the down payment of $12,500 and closing costs of $6,000 at a standard after-tax rate of 4% per annum. Indeed after five years, a person who rents could retain $55,615.
Now what about the position of the person who buys a $250,000 home with 5% down payment? After deducting the down payment ($12,500) and adding the mortgage insurance ($6,531) to the purchase price, the buyer takes a 25 year mortgage at 5.3% in the amount of $244,031. What would be his or her situation after selling his home at the end of the five year term? If there was an estimated increase in property value of 5% per year, after five years the $250,000 home would be worth $319,070. By subtracting the approximate selling costs ($20,000) and the mortgage balance at the end of the five year term ($216,990), the net amount received after a sale would be $82,080.
In this case, the person who bought and then sold the home after five years would have about $26,465 more than someone who just rented and invested the $500 extra monthly payment, down payment and the closing costs.
This is just an example and the figures presented here are just an estimate. A lot will depend on the trend of the housing market in your area, interest rates on mortgages and the interests earned on investments. Check with the real estate and financial experts in your area and seek professional advice to make a wise decision.
So, if you are not sure whether to buy or rent, do not make the decision only by looking at how much you would pay per month as a homeowner or a tenant. With a help of a qualified professional, calculate all the costs and investment growths and compare your probable position as either a home owner or a renter at the end of a certain time period, then make your choice.
Sell House Quick
Sep
24
Mortgage Arrears Primer
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Mortgage arrears are payments that are not made on time or late mortgage payments. Mortgage arrears are something a homeowner should try to avoid. Falling behind on a mortgage can be a very devastating thing. Falling too far behind can mean foreclosure and the loss of the home.
Dealing with mortgage arrears is the only way to protect a home from foreclosure. If a person falls behind on their mortgage there are some very
specific things they should do.
One of the very first things is to speak with the lender. Keeping the lines of communication open is the best possible thing to do. In this situation many people tend to avoid their lender. They are embarrassed or afraid of what might happen. The truth is that lenders do not really want your home.
They want your money and if they have to take back the property they are also losing out, so they will do everything possible to ensure they get their money from you. Lenders are willing to work with you, but you have to contact them. Explain the situation and they may be able to work out something to make it easier for you to pay up the mortgage arrears.
When calling your lender it is best to have a plan. You should know what you financial situation is currently, why you fell behind and how you can handle the situation. You should have all of this information handy so you can fully explain your situation to your lender. Additionally, your lender may come up with their own options and ideas to help you.
If your lender seems to be unwilling to work with you then you should contact a financial specialist who may be able to work things out with the lender. They can help you put together a plan that will be beneficial to both you and your lender.
In order to get your mortgage arrears taken care of without falling further behind, you will have to pay as much as you can possibly afford. You have to be willing to do this even if your lender offers you a repayment plan. While the repayment plan will likely be reasonable, you will be racking up more interest and in the long run end up paying even more money.
The bottom line about mortgage arrears is that they are the homeowners responsibility. You owe the money and the lender has the right to the money. There is no getting out of it. However, if you act responsibly and fast you can get a handle on your mortgage arrears and clear up the situation with minimal hassle.
For the future, you may consider getting special insurance that would pay your bills, including your mortgage, for you should you become unable to work for a period of time or fall under financial hardship. This can help to avoid mortgage arrears in the future.
Quick Property Sale
Jul
20
Rent And Buy Back To Avoid Mortgage Repossession
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Sell and rent back is the best solution for people who are under debts. You can sell and then rent it back as long as you wish too. If you don’t want to relocate, you can stay in the same house as tenant. People generally sell and rent back due to job loss, migration etc. Many owners are not able to pay mortgage payments which may lead to repossession. Lenders may take possession of your house and churn out all their dues through auction.
With sell and rent back options you can stay in the same house as long as you want. These schemes bring a huge relief for hopeless property owners. Relocating is not as easy as it seems. It may be difficult for you to leave the house as you are emotionally attached to it. Just a thought about it, may be nerve-racking. And why not, you have really worked hard to buy this house.
But now you can be happy as many real estate dealers are helping those under debts. Now you can sell your house within a month and get cash quickly. Sell and rent back option releases cash quickly and allow you to stay in the same house till you desire. Such companies offer personalized short term and long term schemes to suit individual needs.
Internet has made things simpler. Many reputed companies have their own websites to help those who are in need. They offer sell and rent back, cash property sale etc on acceptable terms and conditions. Some companies also offer buy back schemes wherein they allow you to buy back the house when you are financially stable.
Sell and rent back can raise capital or avoid repossession and also allow staying in your house. You have to unlock your capital from your home to clear any debts you may have or to fund a better retirement. Sell and rent back schemes can also be a way of funding your retirement without having to sell your home.
Sell and rent back solutions can bring you mental peace and financial stability. Your deal ends in a couple of weeks without exhausting your mind in legal rigmaroles. Such companies also cut down their valuation fees and repay all judicial expenses incurred on the deal. They purchase your house at 70%-80% of the market assessment and then rent it back on an affordable amount. Thus, if you are facing any credit crunch, you don’t have to worry as you can sell and rent back your house. The clouds of debts lift little by little once you regain your financial strength. So, remove all your worries as sell and rent back solutions will allow you to stay in your own adobe.
Quick Property Sale
