How to Handle Mortgage Arrears
For different reasons, people have mortgages on their homes, apartments, and other properties. Most of the time, the mortgage is placed because of a loan that a person took from a bank for a reason. The reason might be all kinds of things - debts, investments, traveling, etc. Whatever the reason is, more often than not, people have real trouble organizing their cash income and the mortgages become too hard to handle. In this article, we'll see how to handle your mortgage arrears and not lose your property completely.
First of all, you need to understand that debts not taken seriously will only become harder to pay out as time passes. After a while, the mortgage will become threaten to be activated by the bank and you might lose a lot of money. If this is the case, you need to act quickly and save what can be saved.
Our advice is to make the popular sell and stay deal. This deal will probably solve your mortgage arrears without a problem. It might not be popular among people who know that property is the best investment a person can make, but desperate times call for desperate measures and it's always better to sell your property instead of keeping the money locked and without any use. The sell and stay deal will keep your property under your govern, but it won't be yours on paper. How is that possible?
Simple, you sell the property and get the money, but you still get to use the place. Let's say it is a house and you live in it. The house has a mortgage. The value of the house is $300.000 and the bank asks for $150.000 to clear your debt. You have no money to pay the monthly fee, so they say that the mortgage must be activated. You sell the house but you make the sell and stay agreement with the buyer. After you pay what you owe to the bank, you end up with $150.000 in your pocket. With the sell and stay deal, the new owner lets you stay in your own house as a tenant. With all those money you won't have a problem pay the rent for a long time, yet you keep away from all the trouble of moving out, explaining your family about the debt and that you even had mortgage arrears. No one will know you had trouble in the first place.
Actually, when you're a tenant, you don't need to pay taxes for the house and taking care of the place is now an obligation of the new owner. With the money left in your pocket, you can make an investment of another kind, buy a new smaller place after you search the market thoroughly or simply live as long as you can with the savings. Just don't forget to ask professionals about how the sell and stay deal is made. There are things that need to be included in the agreement in order to fit both you and the buyer.