Tuesday, 7 October 2008

Home Equity Loans

I saw a report last night regarding the home equity line of credit. In other words, taking money from the value of your home.

In this day and age, this is a dangerous way of getting your hands on quick cash.

Even more dangerous is the new companies that will buy your home and lease it back to you.

In the UK there are more and more unregulated companies that will purchase
your home off you for a reduced price than what you would receive from selling your home the usual way. They then say that you can live in your home for as long as you like.

What they fail to tell you is that you are simply just a tennant to them now. They own your home. You pay them rent to live in the home you purchased.

A sobering thought. What makes it all the more painful though, is due to these companies not being regulated, many are just out to rip off the people who live there. I have heard stories of companies increasing the rent extortionately, so that the people that live there are forced to move out, then the house is sold shortly after for a profit.

These underhand methods of getting their hands on your home should be regulated and should have a governing body but at the moment there isn't one.

If you are tempted to sell your house and rent it back, you have been warned! There may be legitimate companies out there, but most only care about their profits. Once you've signed away your house, their concern for your wellbeing will act like an inverse ratio to how much you end up paying in rent!

If you've found this post useful, feel free to buy me a coffee.