Property Debt, What Are My Options?
| Property Debt is a massive problem in today's world. National debt, company debt, corporate debt, property debt, personal debt on secured and unsecured loans.
In what has become a way of life, we spend more than we earn. In many cases, a lot more. Far too much more, in fact. Mortgages and property debt play a big part in what we owe.
Certainly Northern Ireland is not immune. Like every other country in the so-called free world how ironic there is widespread debt and a glut of the problems that flow from it.This is not new, of course. As long ago as 1732, Thomas Fuller was warning his contemporaries: Debt is the worst poverty.
But you can go back a lot further, far beyond Fuller to the Old Testament books of 2 Kings, David and Proverbs where you will find censures against debt as a concept.Northern Ireland debt has reached record levels with an estimated 250,000 of its citizens now in serious trouble, 62% of that total made up of families in which, in over half of cases, both parents are working.
Figures reveal that the amount borrowed in November 2015 – for Christmas – was the highest for any month since February 2008 when the pre-recession credit blow-out reached its peak. And now borrowing just to make ends meet – is rising again, giving rise to fears over borrowers’ ability to repay. Low income families are particularly vulnerable.Already it is believed that 217,000 adults about 15% of the Northern Ireland population are in greater debt than they can handle realistically. That means that if they were businesses rather than human beings, they would be deemed ‘no longer be viable’.
Unfortunately, human nature is to put off facing up to the problem for as long as possible. Denial, pride, fear, embarrassment, a sense of the perceived hopelessness of their situation and maybe a combination of each of those play a huge part in the process.
Kathy McKenna of Citizens Advice, has warned: Sometimes it’s only when the situation gets out of control – for example when a client receives a court letter or eviction notice, or cannot get access to any more credit – that they will come seeking advice.Our experience shows that people generally wait a year before seeking out debt advice. However, waiting means their financial situation can spiral even further out of control, leaving them deeper in debt.
Everywhere you look, it seems, debt problems abound, with negative equity and other debts accrued elsewhere combining to produce a particularly toxic cocktail.
Negative equity debt where your home now is worth less than the mortgage outstanding on it is a huge source of concern in the overall Northern Ireland scenario.
True, house prices have begun to rise so, finally, there is some welcome growth in the market. But that must be viewed against the backdrop which saw prices in Northern Ireland plummet far more steeply and quickly than elsewhere in the UK. Even in some areas where house prices have increased, they are only half-way back to the level in those days of seemingly endless money and totally affordable mortgages.
Make no mistake; we are playing catch-up – and look likely to be doing so for a long time to come. Meanwhile life goes on and ensuring that it does remains a major problem but nevertheless the priority – for tens of thousands.Many want and require answers to just a couple of basic questions.
| The first of these is: are there negative equity solutions?
Yes’ is the answer. From January 1 to June 30, 2015, Negative Equity NI succeeded in negotiating debt settlements which averaged 12.4%. That means that where the negative equity resulted in a £80,000 clearance shortfall at the time of selling, the average settlement was £9,920. In other words, £70,080 of property debt was written off as a result of voluntary, properly-negotiated-and-agreed-by-both-parties settlements.While selling the property to settle the property debt is pretty much inevitable, that does not mean you cannot buy another home, though that will depend on how the lender views your particular circumstances and the length of time involved in resolving your negative equity debt problem.
Your ability to buy will include such considerations as your credit rating, income, deposit funds and exposure to other debt. Here too Negative Equity NI will advise and assist you through each step of the process.
| The second big question to which people need an answer is this: is there a solution to my mortgage problems and, if so, are there options, too?
Here, too, the answer is yes’ and yes’.
Normally there will be three options and having worked alongside you to find out your precise circumstances, difficulties and hopes, Negative Equity NI staff then will have the necessary information to arrive at the best-possible outcome for you.
Extending the term and/or changing the nature of the mortgage where, clearly, it was totally unsuitable and therefore ought not to have been sold to you are possibilities.So, too, is selling the house in order to bring about a realistic, manageable debt settlement.
If you are in unaffordable property debtor are having problems with your mortgage it may be worth noting that the repossession rate in Northern Ireland in 2015 was four times higher than elsewhere in the UK. And it is now predicted that the number of Northern Ireland households at risk of repossession will rise from 15,000 in 2015 to 32,000 by 2018.
Negative Equity NI provide help in the form of advice and representation for homeowners in negative equity or those with mortgage problems. They have an unrivalled record when it comes to negotiating with banks and building societies on behalf of customers. If you think you may need help, it’s worth contacting us now for a free consultation.
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.