Monday, 23 June 2008

Equity Release Frustration – (case study: equity release idea to solve a cash flow problem)

Life is never dull at the HQ! Last week Mr&Mrs J submitted an enquiry requesting a cash offer for their property after already trying several other “equity release” and “cash buyers” type companies. This is a complicated tale, so I shall start right from the beginning! Mr&Mrs J some year ago where granted planning permission in their back garden (a half acre back garden!) for a bungalow. The idea was Mr J would build new bungalow whilst at work and in his spare time as a long term project – an ultimate a home for their retirement.

Good plan I suppose, despite taking longer than expected, Mr J – decided to take early retirement to speed up the final stages of the self build project. At this point, not only had they over shot their time frame, but their budget too, so things began to slow again. They decides to re-mortgage their old house to release the equity within it to get the bungalow finished. This was not as easy at the hoped, with countless applications it seemed the main hurdle with the re-mortgage was the fact they had no actual earnings. Not matter how many times they explained that as soon as the bungalow was complete the house would be sold and the mortgage clearer – well it landed on deaf ears. Or in Mrs J own words “it was like a real life computer-says-no” situation. To put this in to context, the house valued at £290k, they owed 35k left on their mortgage and wanted to release 50k in equity (this would still leave 205k equity in their old house) No wonder their where frustrations around the whole equity release idea. Obviously they couldn’t sell their house until the bungalow was completed. are always willing to thing outside the box (as they say) so after a few good chats, and a few emails back and forth – we had a plan (a jolly good plan… read on…)

We asked them, what the maximum amount of time they think it would take to complete the bungalow providing having the cash was not an issue – meaning liveable (not perfectly decorated!) Mr&Mrs J agreed 4 months tops. We then put it to them that what if we arranged a cash sale for the property with a separate contract which leased the property to them for 12 months (to be on the safe side). They mulled it over for a few days, and Mrs J drove a hard bargain over the rent – and by the end of the week we where all in agreement that would buy their house from them for cash, then rent it to them for 12 months (the rent would be deducted from the sale fee so they had nothing to pay) and as a good will gesture from Mrs J (having already had our hats well and truly nailed on), should they vacate the property before 12 months she will hand the keys over and cancel the lease so we can renovate and sell it on.

That was about 2 months ago now, so hopefully the bungalow is well on its way – I have made a note on their file to update this post when they move in – any wagers on how long? My guess is 9 months!!

Friday, 23 May 2008

Buy to let repossession misery (case study: buy to let mortgage arrear & repossession)

This was a tricky one for us, as not only did we have the property owner to consider, but also the family that lived in the house, and who had been living in the house happily for 18 months.

The property was originally inherited from the owners parents - but in order to help fund their new house they remortgaged the property as a buy to let, with the idea that they could keep the house in the family - even though it was not the right house for the owners at the time.

So for the last 6 years they have been renting out their property without any problems, mostly on short term 6 month until the last family who where keen for a longer term solution - which suited both parties perfectly at the time.

About 6 months ago however, one of the property owners became unemployed and the lack of income has mean that they have had to use the rent from their buy to let to pay towards their property mortgage, instead of the mortgage on the buy to let. Unfortunately the owner was not able to find a job to replace the one they lost and so the arrears on their buy to let built up. The informed the tenants about the situation that it was likely the property would be repossessed - as you can imagine they where very upset.

At this point, the tenants contacted to see if we could help. Usually we only deal with property owners, as at the end of the day it is them how have to make all the decisions. But given the situation we said we would help as much as possible to find a solution.

That same day we arranged to talk with the actual property owners, who where equally as upset by the whole situation and discussed with them what we do and their options. Despite the property owners own financial problems they where very caring towards their tenants and said above all what is causing them most stress is the guilt that this family might be homeless.

This gave us an idea that in this situation a sell and rent back scheme, not with the owner but with the actual tenants currently living in the property. This turns out to be the king of good ideas - as the property owners sell us their buy to let and we paid them the cash in less than 7 days, this helped to pay off all the debts which had built up during his unemployment. Whats more the tenants got to carry on paying rent just as before - at the same rate, plus we put them on to a long term contract which they much preferred.

So whilst ultimately they did end up selling their buy to let for cash, everyone got what they wanted and whats more there where no repossession hearings, and so no black marks against anyone's name. Another good result for!

Wednesday, 23 April 2008

Sorry we are unable to offer you a better rate at this time (case study: Northern Rock Remortgage Trap)

We have all heard it on the news, about all the people who took out a 100% mortgage with Northern Rock - well, as we first warned eariler this year a significant number of people coming of fixed rate deals can't afford their high standard variable rate. To add insult to injury, there are no other 100% mortgages available so transfering to a cheaper lender is not an option.

This left Mr & Mrs Young Couple is a tricky situation to say the least. After much thought and many emails back and fourth with help and advice about mortgage arrears and repossession they decided the best plan of action would be to sell their home quickly for cash and move in to rented accommodation "whilst the dust settled". We found some good alternative cash offers from - a well respected professional property buying company.

They found a rental property really quick, and turns out they save over £300 per month renting instead of buying!!

Wednesday, 9 April 2008

If wishes where horses (case study: nasty fall almost costs a riding intrustor her home and business)

This lady had worked hard to build up her own riding school, it wasn't huge, and by all accounts bloody hard work - but it was her dream come true. That was until a nasty fall from a new horse left her unable to ride or handle horses. This of course meant she had to hire people to keep her business going - something she couldn't really afford to do, but as she didn't know how long she would be out of action it was the only possibility. Sadly this also meant selling on a few of her horses to keep the costs down. Things did not improve and soon the debt mounted up - being self employed meant she got very little help from the government.

To cut a long story short her dream home and stables where at risk of being repossessed. Even at this stressful time I recall her being more worried about her horses being homeless than herself! Anyway, thankfully she got in touch and we came to an unusual arrange, but one which suits Miss horsey gal (and her horses) perfectly. Basically the property was split so the house was one part and the stables, barn and fields another. To keep her bank happy we agreed to buy the whole lot and with the equity she had built up in the property she bought the stables, barn and field back at a pre-agreed price. We also arranged for her to rent back the house on a long term lease. As complicated at this sounds we got it all sorted in 2 weeks, and there was even some cash left over from the sale which went straight to Miss horsey gal which no doubt helped reduce some financial worry and gave her time to concentrate on making a full recovery - which she did by the way :)

Sunday, 23 March 2008

Till repo do us part (case study: a young professional couple seperate, she wants to sell, he doesn't)

I thought I would start with this one to blow away any pre conception that repossession is only something of concern to the low paid. I terrible misconception really!

Here is the story: A young professional woman contacted us to ask for our help with regards to a property she jointly owns with her ex. They separated over 6 months ago, she moved in with a friend and they agreed he would stay in the house and continue to pay the mortgage. It was quite an amicable split, which seemed to suit them both as there was a high penalty for paying off the mortgage at the time.

To cut a long story short the women decided it was time to buy a place of her own so looked in to how best to free herself from the existing mortgage. She was shocked to find her ex had not paid one single mortgage payment since the day she left. The court date for a repossession hearing was already set, yet it was the first she became aware of the situation. She was shocked, appalled and furious as you can imagine. It turned out her ex was more upset about the spilt than he let on, and it seemed revenge was best served in the red. “I hope it [the hosue] does get repossessed, so you will never be able to have your own house again” (nose, face, cut, eh?)

Clearly this was not going to be a straight forward cash sale!

Our first course of action was to put Ms X in touch with a good local family solicitor who would provide free legal aid to help her obtain a court order for the sale of the property (as both names where on the mortgage and he was not willing to co-operate). Simultaneously we drafted a cash offer in writing for her to show to the bank that she was serious about selling the property and clearing the debt.

It took just over a week to get it all cleared up, then the cash was transferred, the mortgage paid off, and what was left over got split between the two. Ms X planned to put her share down as a deposit for her new house. I good result I hope you would agree!

Saturday, 22 March 2008

Welcome to our blog!

Welcome to The Repossession Diaries, I have lots of interesting case studies to add over the next few days. I hope they go some way towards removing the stigma associated with repossessions. One thing you will learn for certain by reading this blog (I hope) is that no matter how impossible a situation might seem, 9 times out of 10 there is a solution. The first thing you need to do is shake off that feeling of helplessness and take action.