The Real Estate Trap: How to Cope with Debt and Depreciating Value in your Home

Mon, Jun 16, 2014

Financial Advice

Unless you have been on a desert island for the last twelve months, you will have noticed that the global real estate market has enjoyed considerable resurgence in recent times. As it finally emerged from the shadows of recession and austerity, nations’ with developed economies have benefitted from soaring house prices and improved levels of sentiment.

This trend is beginning to reverse, however, with a real estate slowdown finally beginning to impact on numerous regions throughout the UK and other Western countries. Although the level of value in the market has yet to fall, the rate of growth is rapidly declining and forcing many to consider the prospect of a real estate crash and the potential impact of negative equity.

Dealing with a Property Market Crash: The Challenge Facing Home-owners

So while a full scale property market crash has yet to unfold, it is crucial that home-owners prepare for the first and adopt a proactive approach to tackling falling value, plummeting prices and negative equity. Consider the following: –


  • Develop a Foundation of Knowledge and Understanding


As a starting point, you will need to change your attitude to appraising the real estate market. More specifically, you should consider developing a core foundation of knowledge and understanding, which enables you to monitor real-time real estate trends and forecast any future developments that may take place. By understanding the fundamental benefits of real estate growth, interest rates and how supply and demand influence price points, you can estimate the potential value that exists in your home at any given time and make immediate plans for the future.


  • Cut Everyday Costs to Suit your Needs


The primary benefit of this is that you will be able to identify potential periods of hardship and austerity in the real estate market. This will have a positive impact on your behaviour, especially in terms of expenditure and the management of personal finances. If you expect interest rates to rise of the value in your property to fall for a concerted period of time, for example, you may want to consider making financial savings that help to prepare you for any loss of value or equity. By reducing your everyday expenditure and lowering the cost of living on a weekly basis, you can save more disposable income and use this to create a financial contingency.


  • Make Strong and Potentially Difficult Decisions


For some home-owners, the sudden decline in the real estate market may have come at the worst possible time. If you are burdened with substantial mortgage repayments and high rates of interest, for example, a fall in the value of your home may cause you to become trapped in a cycle of negative equity and rising debt. If this progresses beyond the point of no return, you will need to consider making the difficult but proactive decision to sell your home quickly in return for a cash sum. Companies such as Property Rescue offer this service to struggling home-owners in the UK, and strive to execute quick deals that enable individuals to recoup as much value from their property as possible before it is repossessed.

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