Dealing With Negative Equity: How Long Will It Take?
Getting out of Negative Equity might seem like an impossible task, but in fact you could be out of your property nightmare in a year!
Facing up to the reality of your situation is the first step towards putting the wheels in motion. The most important steps you can take are; acknowledge reality, seek the help of those who can provide it and start moving in the right direction.
You have probably tried to ignore matters by burying your head in the sand and pretending it was not and is not really happening. But each time you have come up for breath you have been reminded of reality; the problem has not gone away while you were hiding from it.
So how do you get out of this?
The very good news is that there are positive outcomes, provided you know where to look for them. Our director Tom Cardwell offers some advice to those who need help with their property debt.
| How long will it take?
At any one time in Northern Ireland we have 250 to 400 on-going cases and in most cases we can get people out of a negative equity situation in nine to 12 months.
In fact, from January 1 to June 30, 2015, we resolved £8.4 million worth of mortgages whereby the properties were sold for £4.4 million and our clients settled for £388,000. Our average negative equity case was around £60,000.
Those are highly impressive figures, so there is much hope for those who feel at a complete loss.
How is home equity calculated?
Home equity is calculated by subtracting the amount you still owe on your mortgage from the current market value of your home.
Can you have negative equity?
Yes. With standard loans, your home equity will increase over time. With negative-amortizing loans — a loan with monthly payments less than the interest rates — your equity decreases over time as your owed balance increases.
| Where do you go?
People may think there is no help available, or that their problem is so grim that it just can’t be solved. They might think no-one is willing or would be able to work with them through this. They might even think it’s too good to be true, that there has to be a catch. Sadly, after some of what has gone on in recent years in the financial sector, such cynicism is understandable.
All I can say is that if anyone comes to see us, we will provide the proof of what we have done for people. And we’ll say, There’s a client we were able to help. Go and ring him, speak to him for yourself and ask him what we were able to do for him’.
Here is what one of our happy customers had to say.
People’s cynicism is understandable, but don’t be afraid to put it to the test rather than just dismiss the offer of a solution as being too good to be true.
| Who can be helped?
In each case we deal with, the Individuals and the case itself are different. Some who need a bigger house because they’ve outgrown their current home; some who are divorcing and no longer want that home; some who, through circumstances, simply can no longer afford to pay their mortgage; people who want to downsize.
Our starting point is to know where exactly each of them stand. What are their precise circumstances?
From there it’s about finding out what they CAN do and what they WANT to do. People are in negative equity for a whole variety of different reasons. Each case is a problem we try to solve as quickly as possible.
| How can they be helped?
Having worked out their various starting points the next stage is the sale of the property they’re trying to move on from and negotiations around that.
Typically, from day one to the point where the property is sold, is usually four to six months. That’s longer than the time for a normal house sale and the reason is that we’re asking for the lender the bank or building society to agree to something which, in an ideal world, they’d rather would just go away.
That takes time, which means that if I were to put that house on the market today and had an offer for ittomorrow- even if it’s a fantastic offer – it won’t change that time-frame. It will still take six months.
Still, six months is a very short time in the greater scheme of things. And the dream of being free of negative equity by next autumn certainly is one well worth following.
If you need help getting out of negative equity debt, get in touch with a member of the team today!