selling your house to pay off debt - your options

Selling Your House To Pay Off Debt – Your Options

Debt is an ever increasing problem in the UK with austerity and stagnant wages often cited as two of the biggest causes. In fact, the average debt per adult in the UK is now £30,573; that’s 114% of average earnings. 

So if you’re feeling the pressure of money, you’re certainly not alone. 

Debt is a problem that can quickly spiral out of control without a proper plan in place. Most people start with the small stuff: selling unwanted items on eBay; reducing monthly outgoings; and surviving on beans and rice. Every little helps, but what if that simply isn’t enough? What next?

Most people don’t realise that selling their home could be the easiest and quickest way to solve their financial woes and catapult them overnight into financial freedom. 

Yes – there is no denying that it’s easier to sell your kids unwanted toys than to part with your home, but if mortgage payments are consistently missed, then repossession won’t follow far behind. To put it into perspective, 18 properties are repossessed every day in the UK, while every 6 minutes and 13 seconds someone is declared insolvent or bankrupt. 

When Selling Your Home Makes Sense

Selling your home to pay off your debts is only an option if you’re in positive equity. For example, if you owe £200,000 on your mortgage and your home is worth £270,000, then you can expect to earn around £70,000 from the sale. You also need to be prepared to either downsize or rent. 

Your Best House Selling Options

The average house takes 3-6 months to sell in the UK in a good market with an estate agent. In a bad market, it can take far longer, if at all. 

If you’re in debt then selling speed is at the top of your priority list. That leaves you with two viable options: auction or cash buying companies. 

Auction

Auction offers a quick way to sell, but it’s essentially a gamble on the night; your home will either sell or it won’t. If it does sell, you have no control over the price; so it could be more or less than your expectations. If it doesn’t sell, then you’re back to square one. 

It’s also not a cheap option. The standard fee is £5,000 + VAT up to a minimum of 3.5% + VAT. It’s payable by the buyer, but they will factor that into the offer they make, so it is still more or less coming out of your pocket. 

Cash property company

Cash property buying companies can move very quickly and sometimes even exchange within 48 hours. In layman’s terms, that means cash in your bank potentially within 2 days. 

The best bit? It’s more or less a guaranteed sale as you’re dealing directly with the buyer, so once the price and timelines are agreed, then you can start to plan your next steps. 

There are no middle-man estate agent fees to pay post sale either. That means, the price you agree is the amount you’ll receive. Some companies will also offer to pay your legal fees if you use their chosen solicitor. 

They will buy your property no matter what state of disrepair its in; so don’t worry about that broken window, mouldy tiles in the bathroom, or stained walls. They want your property as an investment and will be carrying out work on it anyway.

If you do choose the cash property company route, you need to select carefully; as with most industries, there are some star players and some rogue traders. Local companies will always offer a fairer price than their national counterparts, and with a local reputation to protect they care about making sure that the process is simple and you’re happy. For further details, read our blog on national vs local home buying companies

Leave a Reply

Your email address will not be published. Required fields are marked *