For some, simply watching what you spend and budgeting well isn’t enough to get your debt under control. Whether your interest rates are sky high or your debt total completely swamps your income, sometimes extra measures are necessary. If you have tried everything else, but unfortunately still couldn’t manage to get the situation under control, don’t worry. You still have some options left. These may only apply to you if you have tried all other options, so don’t take these lightly for your circumstances.

 

 

Loan to value

One of the best tools you have for fighting debt, is your property. It’s an incredibly powerful and versatile tool which you can use to your advantage. Selling a property to pay off debt is the absolute last resort but there are other methods. Remortgaging and equity release are two excellent options which you can use your home for to restructure debt or simply gain a loan to value. The former option is probably the best option if you have a debt amount that is equal to or smaller to the remaining value of your home. Speak to Conveyancing lawyers, Bannister Preston which offer this service to learn more. Essentially, if you have a property that is worth $200,000 but your current mortgage that is yet to be paid off is $100,000, that means you can get out a loan based on the remaining $100,000.

Creditors are now offering a maximum of LTV ratio of 95%, which means you would get $95,000. This lump sum can then be used to quickly pay off any debt that is becoming too much trouble. You can use this money to improve the home, and add more value to it. By the end of your improvements the property might then be worth $350,000, giving you even more financial leverage.

 

 

Home reversion

In the USA it’s called a joint ownership and in other parts of the world it’s called home reversion. When it’s all boiled down, it means you will sell a portion of your property for a cash lump sum. This also means that you’ll be selling the land you have and not just the property. Although you still have the right to own half the property, the contract you sign is going to determine who gets what. Since you are the property owner, you can decide what portion of the home is going to be sold. Depending on the portion, you could get up to 60% of your home’s true market value. Understandably, this is because you will still be living in the property and they do not have sole ownership. You and the new portion owner will become neighbors while living in the same house, thus you cannot expect to get full market value as if you were selling your entire property.

 

A new roommate?

A spare room that isn’t being used is nothing short of a financial faux pas. It’s simply going to waste while you could be making a decent amount of money from it. You can have a tenant and landlord living in the same house. Lodging is a great way to make good use of a spare room. You have full control over the contract and it can be adjusted rapidly to suit your needs. If you would rather have a long term lodger, then you can leave the contract open by not putting an end date. Unlike tenancy agreements for apartments, this is quite common. 

You can also offer a lodging room to someone who is travelling. It’s not just young professionals that are looking for apartments, but travellers that want a room to stay for a few nights, a week or perhaps longer. If you live in a popular city, then travellers might take up the spare room for a couple of weeks while they explore and go sightseeing. Young and old will both take a liking to a spare room that is reasonably priced and close to the city.

 

There are so many ways you can use your home as leverage to pay outstanding debt. Joint ownership is a drastic but solid method to gain a large lump sum which you can then use to pay your debt.