You are not alone. Across the UK, there are millions of people currently dealing with debt. The current economic situation makes debt management challenging, particularly when you take into account how much you owe.
Many homeowners like yourself are facing mounting debts, and they’re looking for ways to pay them off so that they can regain financial stability. One viable option you have is to sell your property in order to pay your debts off.
Selling your property is often a last resort, sit down and get a clear idea of the situation you’re in as this will ultimately decide whether or not selling is right for you.
Make a list of everything you owe, and go from there. So for example, if you’re struggling to keep up with your mortgage repayments alongside other debts such as your credit card or a loan then selling may be the right path for you to take.
However, if you’re struggling with smaller debts such as an overdraft then speak to your creditors and see if they can give you an alternative way to paying everything off.
If selling is your only option, then you may want to consider a few things before you do including:
After you sell your property where will you live?
If you do decide to sell your home, where will you live? Is it possible to temporarily move in with family or friends? Will you be able to afford another property? If yes, will you need to downsize to a smaller house or move somewhere cheaper? Would you consider renting?
It’s also important to consider whether the sale proceeds are sufficient to cover
your mortgage payments. If not, you will need to make up the difference.
Spending extra money in order to sell your property and the time it takes to make a sale.
There is a possibility that you may not be able to sell your home immediately, so take into consideration the amount of time it will take to sell our property, as well as the extra costs that need to be covered, such as estate agent fees and legal costs. And remember that you are still responsible for the mortgage payments during this time as well.
Income and outgoings
Now is a good time to look at your current finances and determine what income you will be living on once you’ve made the sale. Sit down and create a budget plan to work out your income and outgoings.
See if there’s anything in your outgoings that you can cut back on like unnecessary purchases and monthly subscriptions. It’s worth noting that if you’re unemployed and you receive a lump sum from the sale of your property then this might affect whether you are eligible to get benefits or not.
Land registration restrictions
Land registration restrictions are common in the event of a relationship breakdown where both partners are named on the mortgage. They are there as a way to protect your interest in a property. You need to find out what kinds of restrictions are placed on the property as this will affect whether or not you can sell the house. So be sure to seek legal advice where necessary.
You are entitled to put your house on the market with a secured loan on it. However, on the day that you complete the sale, your lenders must be repaid in full. Your solicitor will contact anyone who has a ‘charge’ registered against your property.
This means any lender with a loan secured on your house such as a mortgage company or any other company with loans secured to your home, the ‘charge’ will prevent you from selling without repaying any outstanding loans.
If you have enough equity to pay off both your mortgage and other loans then this shouldn’t be a problem, however, if you don’t have sufficient funds to cover both then you will not be able to complete the sale before you can make alternative arrangements. So speak to your lenders as soon as possible if you think you won’t be able to cover the costs.
What happens to the mortgage post-sale?
Your solicitor will contact anyone with a ‘charge’ on your property and ask them for a settlement figure (your mortgage and any other loan or finance tied to your property) Once the sale is complete these debts will settle before any money can be released to you.
Your solicitor will be aware if the proceeds are not sufficient enough to repay your mortgage at the time of asking for a settlement figure, if they aren’t you will then need to agree with your mortgage lender about paying the outstanding debt before the sale can be completed.
Can you get another mortgage?
The short answer is yes. This will, however, be largely determined by your credit score and financial history. In the event that you have been involved in debt management solutions, such as IVA’s (Individual Voluntary Arrangements) or bankruptcy, this will greatly affect your ability to obtain financial credit and loans.
However, if you have already sold your property to pay off your debts before this point, and your credit history is clean, you shouldn’t have any problems obtaining another mortgage in the future.
Find the right help
Being in debt can be scary and it can have a negative impact on your mental and physical health. According to the Office for National Statistics, 49% of British households are in debt. So don’t feel ashamed in admitting that you’re struggling and need help.
There are many charities out there such as the National debtline that can help you point you in the right direction. Also, speak to your solicitor and get them to contact your mortgage lender or another ‘charge’ in advance so you can figure out an agreement for your repayments.
We take the pressure off of what can be a stressful situation. Sell House Fast Liverpool helps with everything from the valuation of your home to appointing solicitor. It has worked for plenty of people across Liverpool and we can help you, too.