What Negative Equity Solutions Can We Offer?

What Negative Equity Solutions Can We Offer?

THERE are tens of thousands of people in Northern Ireland whose homes are in negative equity. Some 63,000 households, which is 41% of home-owners. That’s a lot.

Negative equity is the term which describes the situation where the current market-value of your property is less than the loan – mortgage – you borrowed to buy it X years ago. Example? If, back in the supposedly halcyon days of the mid-2000s, you borrowed £180,000 to buy a home now valued at £110,000, you have £70,000 of negative equity. Provided you are able to remain in your home – in other words, it continues to meet your physical requirements in that you have not outgrown it, nor, conversely, has it become too big for you, and you are able to meet your monthly mortgage commitments – the fact that you are in negative equity is neither here nor there.

But for those who NEED TO UPGRADE owing to the arrival of children, negative equity creates a real problem. THEY NEED to sell in order to move to a BIGGER HOME, but find THEY CANNOT do so.

And the same is true for those wishing to DOWNSIZE due to their children having reached adulthood and moved out to set up homes of their own. Negative equity is their undoing, too. DIVORCE is another reason for having to sell, the reason being to release both parties from the joint-ownership agreement with regard to the home they shared in happier times.

And, of course, the DEATH OF A SPOUSE often leaves the surviving wife or husband wishing to move from a home which, as well as being too big and expensive to run and maintain, just has too many painful reminders of what they have lost.

In view of all of the above, the very real need for viable negative equity solutions is self-evident.

‘How do I get out of negative equity?’ is a frequently asked question these days. So too is ‘What can I do about property debt?’ and ‘Are there negative equity solutions?’

The answers to the last of those three questions is a resounding ‘YES, there are negative equity solutions.’ Got that? This is not insurmountable!

‘Negative equity’ and ‘debt’ are words which reek of pessimism and despair. In contrast, ‘solutions’ and ‘help’ are upbeat nouns – wholly positive, in stark contrast to totally negative.

So where does one turn to find these answers?

Negative Equity Northern Ireland (NENI) have a hugely impressive track record that offers genuine positivity in the form of assistance which has extricated many individuals, couples and families from what had been seemingly impossible property debt.

How? By negotiating, on their behalf, with lenders to whom they owed money, be it in the form of negative equity, mortgage repayment difficulties, other debts and/or inability to clear the capital loan at the end of an interest-only mortgage term.

There are many in that interest-only mortgage category for whom pay-back time is looming on those loans which at one time appeared to have been such good deals.

Alas, they don’t have the money to repay the capital loan they took out, so they need help now rather than at some imaginary point ‘further down the line’.

Reality is that situations do not just improve of their own accord as a result of ignoring them or hoping/wishing that they will somehow go away. There’s rather more to it than that. Fact.

So here’s the good news. Although they exist in order to make money, lenders – banks and building societies – DO LISTEN in cases of genuine hardship. And provided the case for forbearance is put to them by professionals whose research, knowledge, monetary and legal expertise and final-settlement negotiating skills they respect, the probability is that they will do business. Again, fact.

Now, here’s some more good news. Typically, NENI  achieve 80% to 90% debt write-off for their  customers. That’s people like you, who feared  that they were beyond help.

Lenders know that NENI will have examined and assessed all of the relevant factors and details of those they represent en route to making a settlement proposal.

Ultimately it comes down to trust and respect borne of having conducted negotiations with NENI on many previous occasions.

Provided the reason(s) for debt can be shown to be legitimate rather than spurious, lenders WILL LISTEN to NENI’s negotiators. And where they see clear evidence of a genuine effort to co-operate, they are willing to examine and assess the situation in the hope of arriving at a resolution which suits both you and them.

How can that be?
Let’s put it like this; clearly selling a property on which there is negative equity creates a problem for the bank and the borrower alike. There is remaining debt; you owe them money. So what happens to that? Well, you may be pleasantly surprised to learn that the vast majority of banks and building societies may be prepared to write off – ‘provide debt forgiveness’ is the technical term – some or most of that shortfall.

Now why on earth would they do that?
It boils down to two things – money and time.

Any attempt to recover debt can take a lot of both, so banks and building societies do the sums in weighing up how much time and money they might end up spending when there is no guarantee that they will be able to recoup the outstanding amount. Another consideration is the borrower’s ability to repay. The lender’s options are limited if due to negative equity you will still owe £70,000 following the sale of your property, but clearly are not able to repay this now or at any time in the near future.

In addition, there are legal time constraints on banks and building societies. They can only pursue debt for a limited period after which it is deemed, by law, to be unenforceable. Also, banks have an incentive to agree to a negotiated settlement. That comes in the form of a reduced taxation bill where they successfully write off debt.

And finally, having been entrusted with ensuring that a mortgage was (a) affordable to the home buyer at the time of selling to them and (b) the version best suited to their needs and means, lenders may be wary of ending up on the wrong side of a court judgement in case they are found to have acted irresponsibly. Where that happens, banks are liable for compensation and/or a write off of the debt.

Are You Struggling With Property Debt? Is Your Mortgage Becoming Unaffordable? Get In Touch And Book Your FREE Consultation With One Of Our Experts!

How Does Negative Equity Affect My Credit Rating?

When it comes to your credit rating, clearly negative equity is not an advantage. Never. From whatever angle one views it, there are no plus points for being in possession of a property on which the amount owed is greater than its current market value.

So just how big a hindrance might negative equity be to your credit rating and where there is such a handicap, (a) are there solutions and, (b) if there are, what are they?

Let’s call a spade a spade; lenders – banks and building societies – are in the business of making money.

They do so from borrowers who repay more than was loaned to them, ideally both on time and in full. That is how the system works.

But every loan carries with it an element of risk. That, too, is a fact of life.

Borrowers seek to minimise such risk to themselves by lending to those they believe to be capable of making repayments.

In deciding who qualifies as ‘a low risk borrower’, lenders base their assessment on a credit report. This is an all-important examination of the would-be borrower’s incoming, outgoings and credentials – from the same Latin root as ‘credit’, of course.

The credit report explores your track record, examining your past performance in terms of honouring previous financial undertakings and commitments. The better your history in this respect, the more heavily this weighs in your favour.

While this system is not complex, the conclusions to which it leads are crucial in determining what lies ahead for those under the potential lender’s microscope.

Lenders analyse such credit reports closely, allocating points en route to a decision on the likelihood of the applicant either honouring or defaulting on a credit agreement.

The higher the score, the better the prospects for those hoping to borrow. They have improved options as a result of having more choice. And, vitally, they tend to qualify for cheaper credit, too.

Your credit score is seen as providing a good overall measure of your credit standing. The better your standing, the more enhanced your prospects of getting a keenly priced loan.

Conversely, the poorer your standing…. well, let’s just say there’s a real ring of truth to the old adage that beggars can’t be choosers.

Put bluntly, your present and your future depend very much on your past. Now, you can’t undo your past. But while it’s true that no-one gets to re-write history, it is equally the case that history’s influence on our future can be managed.

In the circumstances, it makes total sense to consult with those who know how the system works and who, by virtue of that knowledge, are best able to protect and project all your credit rating plus points whist simultaneously minimising anything which might undermine your cause or detract from your position when it comes to any future financial contracts or undertakings, be they mortgages or loans for any other purpose.

Remember, safeguarding your credit rating as far as that can be done is all-important at this stage. That is particularly true of anyone living with negative equity. And there are many thousands of them in Northern Ireland.

Negative equity is an unfortunate reality for which few, if any, of those suffering from it are responsible. It is not something any of them chose, for which reason they are victims, not perpetrators. Not only do they require help – they deserve it.

If you are one of the thousands in Northern Ireland dealing with negative equity, get in touch with a member of the team today for help!

Trapped In Property Debt? Need To Relocate?

There are thousands of people in Northern Ireland who are trapped on the property ladder.

The reasons for their plight are straightforward enough; in almost every case they bought at a time when property prices were skyhigh.

Those prices duly nosedived in the wake of the 2008 crash so their value now is less – in many cases, very much less – than was the case at the time they were purchased. Anyone unfortunate enough to have bought when prices were at a record high has been left to pick up the pieces.

Right now their primary objective is to move on the property ladder. In some cases, they may wish – or for purely practical reasons, need – to move to a bigger home. Conversely, there are many whose goal is to downsize.

Circumstances vary from family to family, couple to couple, individual to individual.

In some cases, a couple in their 20s or early 30s may have bought a two or three-bedroom home in 2005, 2006 or 2007. But since then they have had children. Now, as a result, they have outgrown what, ten, nine or eight years ago, was their dream starter house.

The problem is that back then they may have paid £200,000 for it. Today it is worth half of that.

How do they begin to climb the property ladder? Is that a totally unrealistic hope, a fantasy, an unattainable aspiration? Will they ever be able to buy that bigger home or is this simply an impossibility which condemns them to having to just make do?

On the other side of the coin are older home owners – a couple who were in their late 30s, 40s or 50s and who had teenage children when they bought a decade ago.

Now their offspring have grown up, moved on, flown the nest. Consequently, mum and dad are left occupying a home which is bigger than they require and a lot more expensive to run and maintain than makes sense.

When they bought during those property-price boom years, they saw their home as being their nest egg. It all added up at the time – buy a big house in the belief that when the time to downsize came, they would reap the rewards in the form of a handsome resale windfall.

Instead they find themselves in a house which has big rates, big heating costs and big maintenance bills.

In the case of older couples or individuals, mobility may have become an issue. Stairs are a problem, the garden is too big to manage. Or the husband or wife may have died.

Not unreasonably, such people are keen to downsize at this stage. Alas, they too have negative equity. So the same question arises; is it possible for them to move on the property ladder and buy a house much better suited to their requirements or are they, too, condemned to continue living in circumstances not of their making and most certainly not of their choosing?

In their situation, ‘moving up’ the property ladder actually translates best as ‘moving down’ in terms of the square-footage of their would-be home. That, most assuredly, would be an ‘upward’ move in the sense of getting to where they want to be and restored to living in a situation which best suits them. For them, clearly smaller is better.

Others similarly entrapped include a number who opted for the self-build option at a time when that appeared to be a ‘can’t lose’ route. Prices were soaring so it seemed that when it came time to sell, that investment would provide a handsome profit. Guaranteed money, it once seemed. Ah, the benefit of hindsight and all that….

Most of those who are trapped on the property ladder belong in one or other of two camps: they are in a house which is either too big or too small. They need to move because their property no longer works for them.

But their home also has negative equity and therein lies their problem.

Can it be solved?

Oh yes. And encouragingly, those who have vast experience in presenting such cases to lenders know they can expect a sympathetic hearing. Their track record shows that those on whose behalf they intervene – decent, honest people trapped in negative equity due to hitherto-unforeseen and now-unmanageable changes in their circumstances rather than some underhand attempt to escape or avoid their responsibilities – usually emerge intact when it comes to moving on.

At Negative Equity Northern Ireland, we major in dealing with just such cases, and we believe that every such case can be resolved, not least because being Financial Conduct Authority -licenced we enjoys a first-class relationship with the province’s lenders who know we can be trusted.

With staff, who as well as being fully trained in the complexities of mortgages and the law, are wholly sensitive to clients’ needs, anyone requiring help and advice as a result of being trapped on the property ladder can get in touch with us.

If you find yourself trapped on the property ladder get in touch with a member of the team today.