Selling your House to Pay off Debts
A tough financial climate may have left you considering selling your house to pay off debts. Faced with this worry it can be difficult to put a plan in place to get your finances back on track. But don’t panick.
While it’s a big step, selling your house to pay off debts might just be your best move yet.
A fast house sale could leave you free to settle all your debts. You would then be able to move on. What’s more if you do have sufficient equity in your home, you could receive a lump sum on completion. You would then be free to spend this as you wish.
Selling your house to pay off debts could enable you to end your worries over mounting bills as well as mortgage repayments.
In this guide we look at all of the options when faced with mounting debts.
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A quicker way for selling your house to pay off debt
A quicker solution could help you wipe out your debts. You could sell your property quickly to a professional property buying company. But which homebuyers should you consider?
Today, there are no shortage of companies offering to buy your house for cash. However, not all of these businesses can offer you the same guarantees and level of service.
While you may need to act quickly to manage your debt situation, don’t forget your house is your most valuable asset. Make sure you do you research into each property buyer. Ask yourself; will I get an accurate valuation when selling my house to pay off debt? And will the house buying company deliver on its promises?
Getting the right advice
One debt management charity advises that in certain circumstances it makes financial sense to release money locked away in an asset. While this can help in times of financial difficulty, it is important you take time to make the right decisions.
While you may feel under pressure from debtors, you need to protect your own asset and interests.
Look at the market and get a feel for all of the house buying companies. A good way to tell if home buyers are genuine is to look for their official industry scheme memberships.
For example, are they members of the Property Redress Scheme which offers protection to consumers? Also, have they signed up to the Trading Standards approved code of conduct? A house buying company that has taken the trouble to join these schemes values its reputation for customer service.
Don’t feel pressured
You may be worrying about selling your house to pay off debt. We advise taking some time to find out more about companies that buy houses.
Are they upfront about any fees or charges and will they act in a transparent manner?
Will they do all they can to complete your house sale quickly, enabling you to settle your bills fast?
Ask the right questions
Don’t be shy in asking the company if it can prove it has the funds to buy your property. This may seem like a surprising question, but in your circumstances their answer is crucial.
If your question is met by surprise or hostility, walk away from making an agreement. It’s not unknown for some companies not to have enough money to buy your home.
It may be that they never intended to buy your home in the first place. Typically, some companies want you to sign a long-term contract with their business. Often this is so they can lock you.
If you do so, they could take control of your house without you seeing any cash. This would be very difficult in any circumstances and possibly disastrous in yours. Once they had such control over your home, some companies like to use this to seek a buyer on their own terms. That means they have more control over the profit they can ultimately make.
So, when you make your initial approach to a house buying company, ask to see proof of funds before you agree to sell.
Demand clear communication
You shouldn’t feel too rushed in making a choice of a house buying company. While you need a quick sale, you also need to focus on your end goal – paying off your debts.
You should expect to be treated fairly throughout the process and to be kept informed. Find out how home buying companies work.
Your cash home buyer must verify the essential paperwork and carry out a new valuation of your house. Do ask them for a copy of the independent valuation or survey. Failure to provide this should set alarm bells ringing.
Whilst selling your house to pay off debt can generate a real buzz or even nerves, try to keep your emotions under control.
Will I be charged fees upfront?
As we mentioned earlier, in some cases companies may not always be clear about their fees and charges. A cash house buyer should tell you what these are at the start of the process. If they don’t, they would be in breach of your consumer protection rights. Charges do vary from company to company. Despite your wish to sell to meet a deadline, do consider if the fees and charges seem fair or excessive.
Also, will the buyer pay any of your legal fees?
As with when you sell with a traditional estate agent, establish regular communication with the cash sale company.
Have you asked about your position if your sale doesn’t complete, for whatever reason? Consider what this would mean for you. These are important questions given just how big selling a property is.
Will my sale be delayed?
You have chosen a quick sale with a cash house buyer as you need to access funds rapidly. Be clear about your expectations from the outset. With this method of selling your house, expect to receive a lower price than when using a traditional agent.
What price will I get for my house?
In any circumstances, the price generated by the sale of a house is important for the sellers. Given your situation, the price is particularly crucial given that money will be used to pay off debts.
Before you agree to selling your house to pay off debt, ask whether the price of your house is likely to change throughout the process. Sales are always subject to a formal survey and valuation of the property.
You should expect friendly, professional advice and clear communication all the way through the process of selling your home for cash.
Choose a company with a track record of achieving fast sales of homes for cash in the area that you live in.
Make your choice of homebuyer carefully and you could be well on the way to taking back financial control.
- The UK Government has produced advice on the options for paying off your debts. This includes using Debt Management Plans. Their guide is available here.