Cash for houses is usually associated with the buying and selling of property. However, cash for houses can also apply when a homeowner applies for and attains further borrowing.
Further borrowing is when a homeowner has a mortgaged property, and they request more funds to be released. There are 2 main ways of getting cash for houses through further borrowing: (1) the homeowner approaches their current lender and asks for additional funds; and (2) the homeowner approaches a different lender and requests additional funds.
Before the credit crunch lenders were providing further borrowing up to and over 100% of the value of the property. However, this is no longer the case, and many lenders will only provide additional borrowing with loan to values of 75% and under.
For many people in need of a financial lifeline, cash for houses through releasing equity can be a godsend. However, many are finding they are not eligible for this because of the stricter loan to value criteria that have been introduced.
In situations where people need money and cannot get cash for their homes by releasing equity, there can be a problem. Some people use credit cards and hope they can pay the money back in the future. However, this can be risky for the borrower because credit card interest rates are high. Furthermore, other people may rent out spare rooms in their properties in order to get cash for homes in this way.
If all else fails, many homeowners sell their homes and downsize in order to get the cash for houses they require.
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