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Using Bridging Finance to Avoid Repossession

Using Bridging Finance to Avoid Repossession 40

Tempted by some of the lowest interest rates ever seen, first-time buyers have been on something of a spending spree over the past few years.  Unfortunately, evidence would also suggest that a growing number of home buyers are now running into financial difficulties.

Repossession rates are nowhere near as high as in previous years but are rising.

Faced with the prospect of repossession, struggling homeowners can find themselves with nowhere to turn. Major banks and lenders typically are not always interested with borrowers struggling with existing debts, which in some instances can make the whole situation void.

An Alternative Option to Repossession

Defaulting on a mortgage means facing one of two equally challenging eventualities:

  1. Quickly finding the money needed to pay off your mortgage balance
  2. Allowing the bank to take ownership of your home and moving out

With the latter of the two options representing the worst possible outcome, all efforts should be made to repay the outstanding mortgage balance to avoid outright loss. This is precisely where affordable bridging finance can help to prevent repossession i.e.:

  • A couple has an outstanding mortgage balance of £100,000 on their £200,000 home
  • They run into financial difficulties and default on their mortgage
  • The bank demands full payment of the outstanding balance to avoid repossession
  • The couple apply for a bridging loan of £100,000 to repay their bank the monies owed
  • The funds are quickly secured against their home to repay the bank, and the couple sell their home for its full £200,000 value
  • The funds from the sale are used to repay the bridging loan and the couple keep the rest of the money for themselves

The above scenario is a far preferable option to repossession for two important reasons:

Firstly, when a bank repossesses a property and sells to recoup the monies owed, they do not always receive the best price.

Secondly, repossession proceedings can be extremely expensive, and all costs are picked up by the debtors.

Repossession often sees those concerned coming out with nothing.  Debt repayment with bridging finance can be a far more cost-effective option

Always Act Early

The moment you encounter (or even anticipate) difficulties with your mortgage repayment obligations, it is essential to act. The longer you leave it, the more costly and complex it could become to reach an amicable resolution.

By consulting with an independent broker at the earliest possible stage, you will gain invaluable insights into the available options and which best-suits your requirements. In addition, you should always consult with your lender upon encountering financial issues of any kind, as they may be able to help you through them.

For more information or to discuss your requirements in more detail, contact a member of the team at UK Bridging Loans anytime for an obligation-free consultation.

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