Repossession is a nightmarish incident. Homeowners who are paying mortgage payments do not even want to think about it. However, things sometimes go wrong badly and people find themselves in arrears. There are certain moves such as equity release loan etc. that help people get out of such situations.

Effects of Repossession

First up, this is a stressful process. It is difficult for people to come to terms to the fact that they could not pay the loan and now the lender is repossessing the home. Moreover, once your house is repossessed, it is reported to the credit agencies. So your future lenders will come to know that you had a repossession in past. This may damage your credibility.

Serious derogatory marks such as repossession, bankruptcy etc. stay on credit report for long. So you should always try to avoid repossession. Equity release loan is a smart way to avoid repossession. A lot of homeowners choose to release equity to stop repossession.

However, not all homeowners are eligible for equity release loan. If your house is in negative equity, that is the liability or total loan amount is higher than the value of the property, how can you release equity? Before offering a solution for the homeowners whose properties are in negative equity, let’s see how equity release loan works.

Equity Release Loan:

It is a loan against the equity of your home. For example, if the value of your property is 200K and you owe, say, 80K on it, then it has equity of 120K. You can cash the equity and get a loan.

Retired persons or people who are unable to pay mortgage can get a lump sum amount in hand be releasing equity.

Other ways to stop repossession are: quick house sale or sell and rent back plans.

Quick house sale:

By selling your house quickly you can avoid repossession. Once you inform your lender that you are going to sell the house to pay the mortgage, they will not initiate the repossession proceedings.

The money received through quick sale can be used to pay the mortgage and other debts as well. And finally, you can avoid repossession and save your credit. When you become financially strong, you can easily qualify for a loan and buy a new home. There are cash property buyers who purchase houses of any type by paying instant cash.

Sell and Rent Back:

In this process, you sell the house to the buyer and rent it back right then. This allows you to stay in the house even after selling it off. You get a lump sum amount in hand; and you pay rent to the new owner in order to stay in the premise.

Sell and rent back process is a hassle free way of getting quick cash. No need to look for movers, no need to look for a new home either. You get similar advantages when you decide to release equity also.

So, talk to an expert and choose the right option to solve your financial problems.