Money
Retirement
Cash-for-homes warning
Beware 'birds of prey' circling your home. Housing organisations are warning older people to beware of companies which offer to buy their homes for cash as a way out of mortgage difficulties, writes Paul Lewis
A growing number of people are getting into difficulties paying for mortgages. In the first half of 2007, repossessions were up by 30% on the year before and 77 homes a day were being taken back by lenders from people who could not afford their payments.
Even though interest rates have started to come down, more than a million homeowners coming to the end of fixed-rate deals will have to pay more each month for mortgages. That will hit many older homeowners who find their age or changed circumstances mean they cannot remortgage or can do so only by paying a premium rate.
Experts fear that they will fall prey to what a housing organisation has called 'vultures' who offer cash for your home – usually within a few days – and then say they will rent your home back to you for as long as you like. But there are two big snags.
First, the cash is only about 80% of the market value of the property. And second, as a shorthold tenant, you will have no security beyond the first six months. Whatever verbal promises are made at the time, the new landlord can throw you out within a year. And many do.
Adam Sampson, director of the housing charity Shelter, told Saga Magazine: "These vultures are preying on elderly people in particular, who may have fallen into financial difficulty through bereavement or ill health. They exploit the vulnerability of these people by convincing them to sign up for what is plainly a very bad deal."
So never sell your house for cash in exchange for meaningless promises of security. For further advice, contact your Citizens Advice Bureau or a free debt advice agency. Go to Consumer Credit Counselling Service, 0800 138 1111, cccs.co.uk, or National Debtline, 0808 808 4000, nationaldebtline.co.uk
* This article first appeared in the February 2008 edition of Saga Magazine.
* Paul Lewis' opinions are his own and for general information only. Always seek independent financial advice.
