Financial Future

If you are a homeowner, there may be a time when you want to release some of the capital from your property, either through a traditional equity release scheme or a sell and rent back scheme. The reasons for this are varied, although most people who take advantage of it are those who are retired, particularly people who are what are termed ‘asset rich, cash poor’. You may also want capital to pay off some debt, start a business or make another investment.

For a long time, the most popular way of raising cash from your home has been the equity release scheme. However, these are not without their pitfalls. For example, if you choose to release the equity by moving to a smaller, cheaper property, the costs incurred through moving eat into the cash raised through the equity release process. Also, there is the risk of repossession if you secure a loan against the value of your property, which can result in problems down the line.

Sell and rent back offers an alternative to equity release methods and it isn’t too complicated. You deal with a specialist company who purchases your house from you for a percentage of its market value. They then give you the cash from the sale and you can use the money to do whatever you want. You keep living in the property and just rent it back from the company. This removes the worry of your house sliding into negative equity, which can be a concern with equity release schemes.

One of the main reasons sell and rent back is preferable to equity release is that you can get more of the value of the house out of the deal. With equity release, you’re generally limited to access of around 50% of the value of the house, whereas with sell and rent back, you can typically get between 75-90% of the market value of the property. You can also set a price when you sell the house in case you decide you want to buy it back one day.

Sell and rent back is also preferable to traditional equity release as it removes the worry of paying a mortgage. It also means you don’t have the responsibilities of an owner, which takes the stress off if you decide to move later on as you won’t be worrying about the house sliding into negative equity. This is a load off your mind no matter what stage of life you’re at. Ultimately, with sell and rent back, all you have to worry about is paying the rent.

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Running a business can be a really rewarding thing to do and can open loads of doors to you in terms of future prospects and your career. Sometimes, though, businesses run into difficulty and you can unexpectedly find yourself struggling with debt. We look at some of your options to deal with it. Firstly, you should always make sure you get what you’re owed, so check your records to make sure that the money coming into the business matches what it should be.

Another option to deal with your debt if cash collection doesn’t do it is to set up informal agreements with your creditors on an individual basis. Agree a plan with them to pay of your debt as soon as you can and prove to them you’re doing your best to pay by taking action to raise capital. This could include restructuring the business to try and raise some cash or, if you have any major assets, sell them off to raise capital that can go towards dealing with your debt.

A Company Voluntary Arrangement (or CVA) is another option you can use to help manage your debt. This is a formal agreement – although entered into voluntarily – where you arrange to pay back the debt to your creditors. They’ll generally freeze the interest on your debt to make paying it back more manageable and you’ll be able to pay it back over an extended period of time. If your problem mainly relates to cash flow rather than structure, then this is a good option for you.

Sometimes the CVA won’t be enough to deal with your debt, in which case you should consider administration or Company Administrative Receivership. This involves working with company administrators to determine whether your business is viable and if you’ll be able to return a profit, or if the business should be sold off to pay the creditors. You can generally keep trading while this happens, although it often ends in insolvency. If you have a major creditor with a big stake in the company, this is a good option.

Company liquidation is your last resort and the most extreme option. It’s a big step to take as it can often end in company directors being banned from taking similar roles in the future. Your creditors will be paid off according to the legal arrangements you have with them and their stake in the company. The company’s assets will be taken in order to do this. Liquidation can be court ordered following action from your creditors or voluntary, if it’s instigated by your directors.

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Getting a mortgage is often one of the biggest decisions you’ll make in your life, and so you want to be sure that you get the right deal for you. Talking to an independent financial or mortgage advisor is a really good idea before you think about committing yourself to anything. Getting some advice is smart as, no matter whether you’re a first time buyer, wanting to buy a bigger house or planning a move to another location, the whole issue of mortgages can often be somewhat daunting.

One of the most obvious benefits of speaking to an independent mortgage advisor is in their job title – they’re independent. This means they’ll be able to listen to you impartially and give you advice about what to do in your particular circumstances without risk of bias. This reduces the risk of you ending up with a product you don’t want, especially as they receive the same finder’s fee no matter which bank or lending company you go with, so they’ll advise you solely based on which deals are best.

Mortgages can also be quite confusing, and an independent mortgage advisor will be able to help you compare offerings from different lenders. They’ll be able to explain all the jargon that often puts people off the subject, such as what is meant by early payment premiums and the difference between fixed rate and flexible mortgages. Advisors have to be knowledgeable about mortgages to do their job, so you know they’ll be able to help and get you the best deal available to you.

Making an informed decision about which lender to go with is one thing, but once you’ve decided, you also then have to know how to apply for a mortgage with them. Your independent advisor will be able to help you with this as they know the process inside out and will be able to tell you all the information you need to provide, increasing the chances of you making a good application. They’ll help you through the process and provide you with impartial answers to any queries you have.

Finally, it’s worth talking to an independent mortgage or financial advisor as they can often help to speed up the process of applying for a mortgage. You’ll have the benefit of their expertise and experience, meaning that your application is more likely to be a good one. They’ll also be able to keep an eye on the progress of your application for you, helping to relieve some of the stress associated with moving house. Overall, they’ll give you sound, impartial advice and peace of mind in your mortgage.

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If you ever find yourself applying for a loan, you’ll probably have to face a barrage of questions about your income, intentions for the money and how you plan to pay it back. But what about your rights? There are some things you should always ask a loan provider before accepting any money from them. Such as, how much will the loan actually be for? It might sound a little obvious, but it’s amazing how easy it is to end up on different pages over these things.

A vital question you need to ask before signing anything is: will the loan be secured or unsecured? There are key differences here. Secured loans are generally larger than unsecured ones. Unsecured loans are considered to be ‘personal loans’ and secured loans are usually secured against some property – generally your home. This means that if you fail to keep up with the repayments, the loan provider may be able to repossess your house for failing to comply with their terms.

Another key point to ask about is the interest rate you will be charged on the loan. You should ask how this is calculated as it can ultimately add a lot to your debt. Also ask if you will be charged a fixed rate of interest for the life of the loan or if the rate will vary depending on economic conditions. You should also ask what happens to the interest if you miss a payment as this often means you end up paying double as a penalty.

Linked to this, you should ask the loan provider for a clear breakdown of what your monthly payment will be so you know whether or not you will be able to afford it. Many loans will have a regular schedule of fixed payments, but some can vary from month to month, which can be an issue if you have an irregular income. Also ask for the provider to give you a breakdown of any additional fees they may charge you so you know your rights.

The last thing you should ask is: how long will you have to pay back the loan? You need to know how long the repayment schedule lasts for and this is also a good opportunity to ask what happens if you need a break from paying back the money. Some loan providers offer repayment holidays. Also check to see if there are any fees associated with paying back the money early as loan providers often whack on an extra charge to make up their money.

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As the global economic crisis continues, and in the face of rising interest rates, many homeowners have begun to ponder the possibility of using a sell and rent back company to help pay off large delinquent debts and still remain in their home. But is using a sell and rent back company always a good idea? Is it ever a good idea? In this article we will define what a sell and rent back company does, along with some tips to help you make a decision on whether or not a sell and rent back company is the right strategy for you.

A sell and rent back company, as the name implies, is a company that will buy your home quickly, usually well below the market rate, and rent it back to you based on the current rental market rate. Sell and rent back companies typically pay no more than 60-70 percent of what your home is worth at the time, sometimes less, and many will provide you with the option to buy your house back at a later date based on the current market rate.

So who could benefit from a sell and rent back company? Who are these real estate transactions designed to attract? A sell and rent back company is essentially targeting homeowners who are so far in debt that they have very few options left. Either they sell their home at a discount to a sell and rent back company and continue to live there, or continue to be delinquent on their mortgage loan at which point they may lose the house anyway. A sell and rent back company are often the last resort for homeowners who are mired with debt they can never pay off.

If you’re thinking about using a sell and rent back company you should first and always do some research, looking into not only the advantages of this type of arrangement, but the possible pitfalls, too. When you do business with a sell and rent back company, don’t be fooled into thinking this is anything but a business transaction—one that the buyer will profit from and not you. Sell and rent back companies target people who are struggling with debt and they profit from their misfortune.

In summary, using a sell and rent back company is not the wisest fiscal move you could make, but if you’re struggling with debt and you feel this is the only way out, you might want to ask around and see if there is a rent and sell back company you can trust.

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