Sale and Rent Back Plans
Online Debt Management Guide - Page 4 of 6:
The Sale and Rent Back scheme is a different approach to dealing with certain debt management problems that have arisen with a homeowner, and is usually associated with one of the following circumstances:
a) In instances where the borrower has fallen seriously in arrears with his mortgage and/or secured loan repayments, and is facing eviction.
b) A quick sale is necessary because the family may be moving area or even emigrating
c) The desire to remove the responsibilities and uncertainties relating to mortgage contracts and conditions.
d) Where property repossession is looming, but the family does not want to move away from friends, neighbours, schooling etc.
So, here at Shire Direct, we have developed a portfolio of schemes, where we have access to a range investors who are willing to purchase properties and then rent them back to you as the seller, or if you prefer, just to buy the property from you very quickly.
For those who do need to sell the property, and relieve themselves of the responsibilities of being a mortgage-payer, but wish to remain in the property as a tenant, we have a variety of plans to suit differing needs and requirements, and will usually incorporate one or more of the following features:
- This service can enable you to release cash from your property, whilst you continue to live in your home
- Some plans incorporate the opportunity to buy-back the property at the original valuation
- With certain packages, your rent will be prepaid for the first twelve months, thereby enabling you to get back on your feet financially
- Repossessions can be stopped
- You don’t have the ignominy of being thrown out on the street with nowhere to go!
- Confidential. There are no “For Sale” boards, and no one else will be aware of the transaction, or difficulties you have faced.
- Our investors are usually able to complete on these transactions within 7-14 days.
Sale & Rent Back: Case Studies
Case Study 1
Mr & Mrs P have decided to emigrate abroad and are due to leave the country within the next few weeks. However, they have been experiencing difficulties with selling their property, which has been on the market for several months.
Solution:
Arranged the immediate sale of their property using a Sale & Rent Back scheme. This transaction is usually very quick and fuss-free. The plan, in this case not only cleared the mortgage, but also left a sizeable lump sum.
As Mr & Mrs P did not wish to continue living in their property, the flexible nature of our Sale & Rent Back schemes provided an appropriate solution, by removing the ‘Rent-Back’ option.
Case Study 2
Mr R had a repossession hearing in 6 days. He had missed his last 4-months payments and so had been unable to obtain a remortgage, or secured loan to pay off the arrears. He also had an unsecured loan of £8,400 that he had also started to miss payments on.
Here the most appropriate scheme is a Sale and Rent Back plan. This scheme will allow Mr R to remain in the property, and also pay-off his mortgage, clear his arrears, and will leave him with a small cash surplus.
This product also includes 12 months prepaid rent, and therefore has the benefit of providing Mr R time to get back on his feet financially, without having to worry about making rent payments for a whole year.
Using the surplus sum left over from the sale, the next step would be to arrange a Full and Final Settlement on his unsecured debt, which amounted to a 30% reduction.
At the end of the 12 months - Mr R will have a number of options. He can:
- remain living there paying the rent figure that was agreed at sale-time.
- move out and find a more suitable property for his needs
- have the option to buy the property back – should his situation have improved significantly.
So to summarise, let’s just consider the advantages and disadvantages of the “Sale and Rent Back” scheme:
What are the advantages and disadvantages of a Sale and Rent Back?
Advantages
- You have the benefit of remaining in their property
- You may be able to release some equity from your property
- You may be able to clear your unsecured credit
- Up to 12-months rent can be prepaid with some schemes, whilst you get back on your feet
- No ‘For Sale’ boards will be erected
- You may even be able to claim state assistance towards your rent payments
Disadvantages
- You will lose ownership of the property
- The future rent payments could be higher than your current mortgage payments (especially if there is only a small balance on the mortgage)
NEXT: Full and final settlement ›
