It seems that almost on a weekly basis now we are hearing rumblings from media property experts, government officials or banking sources that interest rates will rise in the near future. Whether you believe interest rates will rise now, in a years time, or longer is not really the issue. The fact is that they will rise.
Are you one of those landlords who built a large portfolio by using only one or two lenders, or do you own businesses that have high loan to value rates? Or, are you worried that interest rate rises could push your business over the edge financially, and that you may default on those loans?
Easy Lending Issues
Back in the days when anyone could could obtain easy credit and banks couldn’t wait to throw money at risky ventures, many people became first time landlords, building large portfolios with little, if any, equity, on the basis that if it all went wrong they could sell up and move on. However, what many failed to grasp, was that property prices can fall as well as rise, just as interest rates can. So now we have a scenario where portfolios set up with high leverage, no equity, low interest rates and values that have dropped significantly in most of the UK.
This heady cocktail can go bad in many ways, and often, landlords and business owners are hanging on only because of the very low interest rates. If the predictions are correct and interest rates start rising towards the end of 2014, logically, you may only have a year to get yourself onto safer ground before the storm starts.
Act Now If Interest Rates Rises Will Effect You
The time to act is now. Don’t wait for a default notice to happen before you take action. One thing our bank negotiator specialist has taught us, is that when dealing with banks the time to restructure your finances is when you can still get finance and have good enough credit rating to back it up. Once default notices start happening the process becomes much more painful, more time consuming ,and more expensive to fix. It can also be very stressful.
Now that we have a new year upon us, take a cold hard look at your portfolio and your current business assets. Work out how much of an interest rate rise hit it could take before you get into trouble financially.
Turn Around Your Business
Our business turnaround specialist can review your portfolio and give you some advice on what action you should take to repair it. This may take the form of perhaps selling some assets, or refinancing with institutions who do want to lend, using asset finance or hosts, and of course it can be possible to negotiate the debt down to more manageable levels.
There is no fee to find out if we can help you, our banking and business turnaround specialist only charges upon commencement of working on your behalf. If cash flow is tight he will even spread out the costs while working for you. If you think you may be in trouble when interest rates rise, do something about it now.