Let’s just take a quick look at those issues raised by personal debt – you might be surprised at how far reaching these can be; unless, of course, you find yourself in this very situation.

Stress

Well, this one won’t surprise you at all – being in debt weighs heavy on the mind. You daren’t go sick from work, despite how ill you might feel. The problems follow you to bed so you don’t sleep, which makes you feel even rougher. Stress is recognised as an illness of our fast and furious 21^st century, being in debt just makes that stress worse.

Money Taken at Source

Even though being in debt is now a common problem, most people still see talking about it as a taboo. If you owe a large amount of money the person you owe it too might order a court order to get debt instalments paid from your wages before you get them yourself. This is known as wage garnishment. Point number one – if you’re struggling for money you can ill afford to lose any of your wages and, point number two, having your employer know about your financial situation can feel hugely humiliating. And, although your employer can’t legally fire you for having one garnishment, he can fire you if you have multiple garnishments

Divorce

Debt is one of the major driving forces behind the divorce statistics. Almost half of all UK marriages end in divorce, with 132,361 divorce petitions in England & Wales in 2009

Inability to Purchase a Home

A poor credit rating will negatively affect your ability to get a mortgage.

Eviction

When debts mount up it can be tempting to shift the money around, paying off some expenses at the cost of others. An eviction on your credit report will do little to help you get yourself back on your feet again.

Emotional Breakdown

Some people cannot handle the relentless pressure put on them by demanding creditors.

Murder

Did you know that debt and the accompanying emotional stress is one of the major causes of murder in the UK? accompanying

This does not make for comfortable reading does it?  However, you’ll feel a whole lot better if you take control of the situation.  As the very minimum we would suggest the following:

1. Acknowledge the problem
2. Do not be intimidated
3. Pay debts that secure the roof over your head first
4. Get free impartial debt advice
5. Treat commercial debt relief companies with caution
6. Do not rule out bankruptcy
7. If you are thinking of taking on something like an IVA make sure you understand all the costs and charges up front
8. Stop all unnecessary spending now
9. Check out the Consumer Credit Counselling Service
10. Find a form of therapy other than shopping

1. Check the property out properly! Just as with any property, the valuation should take into account things like transport links, proximity to local schools, the quality of those schools, local levels of employment, local development proposals.  There are a couple of free sites that will help you in this process: nethouses.com and House Prices.
2. Speak to a mortgage broker especially if you’re in the market for a new mortgage. London & Country offer free telephone advice.
3. Don’t go to one of the ‘specialist’ brokers who advertise mortgages for bad credit risks; you’ll just pay through the nose for the same services that other brokers offer.
4. Learn about the marketing of repossessed properties – like the vendor doesn’t have to take the property off the market even when they’ve accepted an offer!  It pays to be in a position to complete quickly.  This means that:
5. You should have your finances in place at the outset.
6. Know what you’re buying, it’s easy to put on the rose-tinted glasses if you’re getting a property below market value.  Don’t! A property is a property and independent surveys are vital – especially with repossessions!  The Royal Institute of Chartered Surveyors (RICS) is the place to to find a local chartered surveyor.
7. Ensure there are no sitting tenants.  If the property was previously rented out this is a distinct possibility…
8. Gas, water, electricity and telephone will probably have been switched off, so you will need to arrange for reconnection.  You will probably be charged for reconnection of the phone.
9. Watch your own credit rating.  A question commonly asked on our forum is what effect living at a repossessed house will have on your own credit rating.  The chances of your records being muddled with those of the previous owners/tenants are slim but it pays to check. Once you’ve been in for a few months, sign up for the Experian Credit Expert report.  They offer a free 30 day trial!
10. Contact the previous tenant’s creditors as and when the brown envelopes fall through the letter box.  Tell them that the defaulters have moved on and you shouldn’t have to deal with heaps of demand letters or bailiffs turning up at the door.

However, Charlie Noel-Buxton of Cluttons Estate Agents adds a note of caution.  In the past, he says, there has been confidence that prices will rise, nowadays, though, there is no capital growth to cancel out any losses. That means that going over-budget or exceeding scheduled time will have a far greater effect on any profits than in the past.

Then, of course, there could be difficulties in getting the necessary finance, with residential development attracting less lending than most other sectors.  Calum Kerr, from broker Savills, reminds us that high street banks no longer offer residential development loans, limiting options open to those hoping to buy and redevelop. Where finance is available, lending criteria are incredibly stringent and loans will be granted only to those with proven development experience.

You could consider specialist lenders that will lend on self-build and large renovation projects. Remember though that these will often be stage payment loans lending on the present value of the property and then revaluing once some work has been completed with a view to releasing an additional stage payment. These are also slightly more expensive than standard mortgages.  You could apply for standard mortgage finance if you are intending to live in the property whilst renovations are undertaken.

The ubiquitous Sarah Beeny gives the following advice:

• Focus on who will ultimately end up buying your property and designing it to suit that buyer.
• If you can buy a house in a quiet road, near a good school with a garden and ample parking, alter the layout to include a kitchen diner and finish it to a good standard, there is no reason why a family would not want to buy it but deck it out as a bachelor pad, and you’ve got problems.
• The safest properties are Victorian terraces in quiet streets, close to schools and with a good garden, but these will be the ones that have the least potential profit because they are safe bets.
• The easiest way to add value is by adding space. House extensions increase the square footage of a property and allow you to sell on for a higher price.
• Finding a property where there is a problem to overcome should also ensure a good return.
• If the layout of the house is awkward you can add value by rectifying it to open up the space.
• Ugly façades of Sixties and Seventies buildings can be improved quite easily and will boost sale prices.
• If renovations have previously been executed poorly and period features hidden, revealing them will boost resale value.

Buying a repossessed house can be a great way to get on the property ladder, or grab an otherwise unaffordable bargain. Before buying a repossessed house, there are things to think about.

What happens when you buy a repossessed property?

When selling a repossessed house, the lender publishes an official ‘Notice of Offer’ in the local newspapers. This acts as formal notification that the lender has received an offer. And it gives them the opportunity to get a higher price if an interested party reads the notice then makes a counter offer. Luckily the opportunity to counter offer is restricted to a specific date, not open ended. But if someone makes a higher offer you’ll probably lose the house unless you can beat it.

Extra costs to factor in

If your offer to buy a repossessed home is successful, bear in mind that you might have to pay for essential services like water, gas, telephone, internet and electricity to be reconnected. And because you’ll probably also be asked to pay for repairs when buying a repossessed house, you’d be wise to arrange a full survey before you take the final plunge.

Creditors and bailiffs

When buying a repossessed house you might find that creditors come to you looking for the previous owner, via calls or letters from bailiffs. The best thing to do is reply promptly and let them know that you’re not the person they’re after. Worse still, you may have problems getting credit because the previous owner’s details have been lodged with a credit reference agency. If you’re buying a repossessed house it is a good idea to check as soon as you’ve made the purchase, and ask the credit reference agency to correct their records before things get complicated.

•    Equifax.co.uk 0870 010 0583
•    Callcredit.co.uk 0870 060 1414
•    Experian.co.uk 0870 241 6212

Agencies generally charge a small a fee of £2 to send you a copy of the data and you should get it, including details about how to change the information, within seven working days.

The Citizens’ Advice Bureau will also give good advice and guidance to those buying a repossessed house, as will the solicitor who is dealing with the sale. Either way, it’s wise to take all the advice you can find to help you avoid potentially expensive pitfalls.

Repossessed houses: amazing bargains or a risky strategy?

Repossessed houses are homes being sold by the bank or building society which has repossessed them, to whom they legally belong.

Buy repossessed property and make big savings

It isn’t surprising that the recent sharp increase in repossessed homes has resulted in more and more people taking advantage of the situation. Because repossessed properties often sell for less than if they were sold under normal circumstances, there’s the potential for big savings. Aspiring first time buyers are benefiting from a unique opportunity to get hold of a really good deal. People who have been, so far, unable to get on the property ladder are suddenly able to find affordable housing, if they can get a mortgage.

How to find repossessed houses for sale?

If you’re buying a repossessed house, you might find yourself having to search hard for suitable properties. Not because they’re rare, but because many estate agents prefer to keep repossessed houses’ status quiet. To most people repossession is bad news. And as far as estate agents’ reputation is concerned, the concept of repossession is far from positive! Some tips on buying a repossessed house:

1.    One way to find repossessed property is to enquire with your local mortgage lenders; usually banks and building societies. While they don’t usually advertise repossessed houses up front, they need to sell these properties to recoup their money and they’re usually more than happy to get enquiries.
2.    Another way… check your local papers, where mortgage lenders announce offers they’ve had on repossessions in the hope of getting higher offers.
3.    It also helps to keep an eye on your local property auctioneer.

Get more advice at moneysavingexpert.com and repossessedhousesforsale.co.uk

A few things to bear in mind when buying a repossession:

•    Repossessed houses aren’t always in perfect condition, especially if the previous owner didn’t have the money to keep up maintenance. You might find damp, leaks, faulty drains or broken heating systems.

•    You might find you need to do a lot of cleaning, especially when the property has been empty for some time.

•    Sometimes, a home is repossessed because the original owner simply hasn’t been able to sell quickly enough to avoid repossession. There might be a good reason for this; terrible traffic congestion, a noisy pub in the same street, no local train service or one right outside your back door… it’s wise to check carefully.

A great place to start looking for repossessed houses is at auction and Allsop are one of the largest in the UK.

To find out more about repossessed houses for sale, visit our forum.