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Property transfer is nearing and no money to pay the bond, now what? |
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I hear from investors that there are some properties they bought a year and more back that didn’t transfer as they were under development, and now with the increases in the interest rates they can’t afford the mortgage bonds when the properties transfer.
To these purchasers I see a few routes to getting the mess sorted out. There may be many routes, but this is what comes to mind:
- They can go to the bond attorneys (bond and transfer) and
under the NCA (if applicable) just say to them with a written letter
that you can no longer afford the bond due to increases in interest
rates. They may or should actually under the NCA, cancel the bond and
the deal and one may lose the deposit. This may not be a brilliant idea
but definitely better that than repossession. Lesson leant, easier and
far less painful. Well maybe not on the pocket but definitely on the
trouble and the repossession as the deposit with the property will go
anyway later down the road.
- The next option is to sell
before transfer – one should immediately advertise the property at
cost, in other words that at least one doesn’t lose the deposit and
fees. Try to get the best deal and an offer ASAP, back on back to the
offer that was about to transfer, send it quick to the transferring
attorney. They will transfer both offers in the same time and you won’t
have to pay not even one months bond. Problem solved. But if you can’t
do that and find yourself close to the deadline you may just try option
number one. If number one doesn’t work, find an investor and try to
sell at best price possible. Anything is better than repossession if
that is a real threat.
- The other option is to take transfer
count the pennies and pence and make sure you can hold on to it until
you sell it, provision for some 12 to 24 months if you want to sell
with some profit, though that profit may just be non existent as it
would have been swallowed up in 12 months by the shortfall in the mean
time. (I am assuming of course this is a new development and usually
the rents are far lower than the selling prices). If one can hand on
for 24 months the market may just turn around enough to make some
profit and be home free with this venture.
- Last option I see
if for those that bought more than one property off plan from developer
and now sit awaiting for a few bonds not only one. The total of the
bonds may no longer be affordable. In this case one can just sell some
properties waiting to transfer, enough to make the bonds of the
remaining affordable. Either way in option 4 all option 1 to 3 apply to
get rid of some properties before you can no longer pay the mortgage bonds and start hurting financially.
Well, one thing I have to say, the down side to property and real
estate is simply it does not move fast. You can’t sell it as fast as
you buy it and if you need to sell fast, it can become a problem as
property unlike the stock market, you don’t press a button and the
stock is sold.
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