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  • FIRST POST
    janakajan
    Advice needed regarding 'Sell and Rent Back'
    • #1
    • 14th Jun 07, 10:59 PM
    Advice needed regarding 'Sell and Rent Back' 14th Jun 07 at 10:59 PM
    Hi,
    My situation is this. I am on a fixed income (working and child tax credits). I decided to buy my council house about three years ago simply because the mortgage at the time was a lot less than my rent.
    Trying to keep this as short as possible, the main problem now is that the mortgage repayments have just gone up and up over the years to more than double the original figure, and I just cannot afford it any more.
    I have tried to find a cheaper mortgage lender, but because mine is the only wage coming into the house, and because I am on an IVA programme, I have been told that not many lenders would want to take it on, and if I did find a lender, that the rates would be the same.
    Apart from the IVA payment, all my other outgoings are utility bills and housekeeping, so there is nothing else I can get rid of, and the only thing I can think of doing now is to sell and rent back my house.
    My problem now is that I cannot find any 'honest' information about this scheme. It sounds like a good solution, but my worry is that the 'rent' would be exactly the same as the mortgage repayments, or would start off reasonable and then escalate like my mortgage has.
    Does anyone have any information or experience of this scheme? Or know of a website that could help me with this? Any help would be gratefully received.
Page 1
    • KellsBells
    • By KellsBells 14th Jun 07, 11:13 PM
    • 432 Posts
    • 386 Thanks
    KellsBells
    • #2
    • 14th Jun 07, 11:13 PM
    • #2
    • 14th Jun 07, 11:13 PM
    I'm not being very helpful I'm afraid, just wanted to suggest you put this on the on the homes buying and selling forum, as there'll be people a lot better equipt on that board to help you.

    Godd luck.xx
    [FONT=Comic Sans MS][SIZE=1]Official DFW Nerd Club - Member no. 414.....Proud to be dealing with with my debt!
  • rayday2
    • #3
    • 14th Jun 07, 11:50 PM
    • #3
    • 14th Jun 07, 11:50 PM
    From what I understand of these schemes you could end up even paying a little more in rent depending on how high the % of your mortgage is. Also you have to consider that if you rented from a private landlord and your boiler broke or tiles needed replacing you get the work done. From what I understand (you definately need to be asking these questions) you are responsible for the upkeep.

    So you pay all those years rent, pay for repairs and at the end of it you don't own the property. I personally if I was in the boat would rather sell up get rid of all debts and rent privately save a bit and then get back on the ladder with a wiser head.

    I used to work part time in an Estate Agents and rent was pretty high compared to say a 90% mortgage on an equivalent property.
  • Conor
    • #4
    • 14th Jun 07, 11:55 PM
    • #4
    • 14th Jun 07, 11:55 PM
    Sell and Rent back works no different to a private rent in regards to tenants rights and landlords obligations.

    THe level of rent is limited by the Rent Officer at the local council. A Landlord can't just set whatever figure they want and if you disagree with a rise, you can ask the Rent Officer to look at it - downside is that this can work both ways with him upping it if it's too low although the Landlord doesn't have to comply with any raise - it's just that the "Fair Rental Value" will be higher.

    THE LANDLORD is responsible for any repairs, not the tenant.
  • janakajan
    • #5
    • 15th Jun 07, 7:41 AM
    • #5
    • 15th Jun 07, 7:41 AM
    Thank you all for your advice. I did try the homes buying and selling forum, but I only found one similar post and it was suggested that they try this forum for advice, though I did find out that the buyers only give you 75% of the value of your house.
    I don't actually have any debt to get rid of (apart from the IVA payment), and this is the problem. Because my mortgage has risen so high, and because I can't earn any more money, I am struggling to pay regular household bills. More horrifying is that I know it's just going to keep rising.
    The reason I am considering selling my house and renting it back is so that I can stay put. My mum just lives a few steps away from me and I need to stay close to her (she's 76 and she has dinner with me every evening that I'm not working and stays a few hours). But maybe the rent will not be any different to the mortgage repayments, and I would end up in the same boat.
    • Eager_Elephant
    • By Eager_Elephant 15th Jun 07, 7:55 AM
    • 4,079 Posts
    • 21,892 Thanks
    Eager_Elephant
    • #6
    • 15th Jun 07, 7:55 AM
    • #6
    • 15th Jun 07, 7:55 AM
    Hi

    The problem I can see is that if you sell your council house before a 5year period is up you have to pay back the discount to the council - would you be able to afford to do this.

    I see the problem you are having all the time, these mortgage companies that give mortgages to right to buys always increase their interest rates quicker than high street banks so the intial idea of owning your home looks very cheap but over time it is not.

    Could you contact your IP and ask for an amendment to the IVA, either a new creditors meeting where they agree to reduce your pence in the £ over the 5 years or you pay a reduced amount but over 6 instead of 5 years?

    The first idea will cost more money (in that more will come out of the IVA pot at the end of the term) but would be more worthwhile.

    Any questions let me know

    EE
    • CLAPTON
    • By CLAPTON 15th Jun 07, 8:45 AM
    • 41,656 Posts
    • 30,687 Thanks
    CLAPTON
    • #7
    • 15th Jun 07, 8:45 AM
    • #7
    • 15th Jun 07, 8:45 AM
    have you tred to remortgage to get a lower rate? try an independant mortgage advisor
    • Shineyhappy
    • By Shineyhappy 15th Jun 07, 9:40 AM
    • 1,722 Posts
    • 4,197 Thanks
    Shineyhappy
    • #8
    • 15th Jun 07, 9:40 AM
    • #8
    • 15th Jun 07, 9:40 AM
    Have you tried posting a statment of affairs so we can see if we can help you make any savings thus making the mortgage payments easier?

    Also have you thought about asking the bank if you could change the mortgage to interest only for a year or so?
    Paid off: MS cc 750 Paid of OH 500 sofa 600 Lloyds cc 750 OD 2500

    10% mortgage OP £356.00/£178850 by Dec 12
  • DAVETHE CARDBOARDBOX
    • #9
    • 15th Jun 07, 9:43 AM
    • #9
    • 15th Jun 07, 9:43 AM
    Put up your full financial facts so people can advise on whether this is the best option, before you decide on this path. There may be better, more acceptable things you can do than sell. You may be missing something that will alleviate your dilemma anyways, worth a try.
  • janakajan
    Hi Clapton. Yes, I have tried to remortgage, but my age and my income go against me. But thank you for your suggestion.

    EE, Thank you. Yes, you are right about having to pay back the council discount, which is about £25,000. I hadn't thought of that. It seems every way I turn there is a brick wall.

    I think I've tried to play down the desperation element here, so that I don't sound over-dramatic and have all you good people avoid my problem, but the truth is that I am actually very desperate indeed.

    Regardless of past mistakes, my financial situation at the moment is dire. When I have paid out my regular bills and the IVA payment, There is only £47 a week left for my 11-year-old (adopted) son and me to live on. Even worse, I was unable to pay my last electric bill, and to save being disconnected, I have had to agree to a prepayment meter being fitted. They have told that they will recover the debt at £7 per week, which means that I now have only £40 a week to live on, and out of this I will have to pay for my electricity as and when I use it. The meter is being fitted next Thursday, and I really feel that this is my Doomsday.

    Your idea was good about asking for a reduction in my IVA repayments, but there are problems here too. The company I chose to help me, (or rather, they chose me after the first company I contacted refused to help me because my debts were not high enough) I have lost trust in. They actually missed one the payments and I subsequently received demands from my creditors and a default notice from my old Bank. They caught up the following month by doubling up the payment, but it doesn't leave me in a very comfortable position. I don't think they would go with your idea, or might even drop me as a client if they think I am being awkward.

    So that's the gist of my true situation. And I really don't know where to turn or what to do next - apart from cry.

    My Mum, by the way, knows nothing about any of this. She thinks everything is fine, and I want to keep it this way. She has never been in debt in her life, and would be shocked at the enormity of mine. She is a terrible worrier and suffers from high blood pressure. My son and I are her only genuine source of love and company, and I couldn't hurt her or face the consequences of her finding out how very bad my life is.

    And that's it. But I thank you all deeply for your responses. You are wonderful and this is a wonderful site. It's really heartening to know that there are people here who have taken the trouble to listen and try and solve my problems without criticising.
  • janakajan
    Hi Davethecardboardbox and Shineyhappy. I have just read your replies after posting mine. Firstly, how do I post a statement of affairs please? And secondly, I don't have my mortgage with any Bank (they wouldn't give me a 25-year mortgage because of my age), it's with a lending company called Capstone Mortgages. I have asked them for advice by the way, but they only offered me an interest-only option. It sounded OK, but when I received the forms I found that I would only be saving about £40 per month on the new figure, which they warned me would go up by £57 if the interest rate went up by 1%, and then I would have to tell them how I proposed to repay the rest of accumulated figure later, which was the most ridiculous amount - about four times more than the settlement figure is now.
  • Smashing
    Hi Davethecardboardbox and Shineyhappy. I have just read your replies after posting mine. Firstly, how do I post a statement of affairs please?
    Originally posted by janakajan
    SOA link
  • DAVETHE CARDBOARDBOX
    Beware of advice from people who only offer their own products, definite no go.
    • Shineyhappy
    • By Shineyhappy 15th Jun 07, 10:23 AM
    • 1,722 Posts
    • 4,197 Thanks
    Shineyhappy
    Ok, once you have posted up your SOA we will try our best to help.

    I think there is a website called www.entitledto.co.uk Please someone correct me if I am wrong! But that tells you what benefits you are entitled to. I dont know if that would help.

    One of the best pieces of advice I can give you without knowing anything more specific is take your time and nose through all the information this site has to offer. I have joined Quidco and Pigsback and have chased up money owed to me beacuse I have seen the success of people on here. I have Ebayed and Amazoned and sold my old mobile to a mate. I have reduced my shopping bills and have generally become more inspired and more pro active about paying off my debts quicker.

    Post your SOA and then keep posting!

    Also look at the Olympic challenge 2007 thread (specifially post one) to see some ideas for raising cash. Look at some of the other challenges to pay off debts. Lynzpower is giving some fab Quidco tips on the paying off 1000 pounds challenge.

    This is a great place for help, advice and support!
    Paid off: MS cc 750 Paid of OH 500 sofa 600 Lloyds cc 750 OD 2500

    10% mortgage OP £356.00/£178850 by Dec 12
    • Verbatim
    • By Verbatim 15th Jun 07, 10:35 AM
    • 4,485 Posts
    • 12,951 Thanks
    Verbatim
    Hi janakajan,

    Sorry to hear about your situation. It certainly sounds dire. Have you been to the CAB? It sounds as if you should be entitled to some benefits or more tax credit.

    Have you got a spare room you could rent to a lodger?
    CCs @0% £24k Dec 05 £19,621.41 Au £13400 S 12600 Oct £11,981 £9481 £7500 Nov £7250 D £7100 Jan 6950 F £5800 Mar£5400 May £4830 June £4660 July £4460 Aug £3200, S £900, £0 18/9/07 DFW Nerd 042
  • Conor
    Hi Clapton. Yes, I have tried to remortgage, but my age and my income go against me.
    Originally posted by janakajan
    It'll be your income, not your age. My FIL remortgaged at 66 years old for £85k even though he only lives on benefits.

    I know that with fostering, there's an allowance of approx £100 a week available and my friend took over custody of his wifes sister (long story but she's a minor) when her parents died and he got £100 a week benefit for her.

    Check that you're getting every benefit you're entitled to.
  • janakajan
    Thanks again for all your replies - I am overwhelmed by your concern with my problem. I will mull over these properly when I have more time to concentrate, as I have to get ready for work now. I work nights (3 long shifts) over the weekend and don't have much time in between sleeping and working for much else.
    Thank you all again. Jan
  • milkydrink
    (((((((((((((hugs)))))))))))))))))))))

    I don't have any answers, but try not to let go of your house if there is ANY way of avoiding it at all.
    The reason these schemes are about is because they make money, for them not you.
    What about the CAB for advice on benefits, ect.
    It won't take long to pay of your electric arrears at £7 per week, then it can be re-set to normal.
    Post ALL you financial affairs on one of those SOA & I bet someone will have good ideas.

    Chin up
    • beanielou
    • By beanielou 15th Jun 07, 9:42 PM
    • 47,214 Posts
    • 169,640 Thanks
    beanielou
    Do you currently pay a fee for your IVA Jan?
    if so please contact Paylan or CCCS for advice.
    Could someone post the links for me?Thanks.
    Lou~ Debt free Wanabe No 55 DF 03/03/14.
    **Credit card debt free 30/06/10~** **Weight loss 2 stone 2 lbs **

    "A large income is the best recipe for happiness I ever heard of" Jane Austen in Mansfield Park.
    ***Fall down seven times,stand up eight*** ~~Japanese proverb.
    It starts with you, it starts from now. *** It is ok to be me.*** ***Keep plodding***
    • Eager_Elephant
    • By Eager_Elephant 15th Jun 07, 10:48 PM
    • 4,079 Posts
    • 21,892 Thanks
    Eager_Elephant
    Hi Jan,

    Can we just clarify you are in an IVA and not a DMP?

    From your original post I thought you were in an IVA but after you said about missing a payment and getting loads of letters this reminds me of a DMP.

    An IVA is a legally binding contract in law, your Insolvency Practitioner would have held a creditors meeting and they would all have voted for or against, if less than 75% said yes then you would not have had an IVA.

    A DMP is a debt management programme, whereby you pay a set amount each month to a company who then send it pro rata to your creditors each month. This is not legally binding and they can take further action if they so wish.

    Beanielou, for info all IVA's have fees built in, it is a DMP that some companies charge for. (This is all terribly confusing)

    If Jan, you could also confirm the company name I would probably know straight away.

    If you are struggling that much with your payments and your situation is not going to improve bankruptcy may be a better option but of course we need to see the SOA. I know you may loose the house but at least you can rent so you will still have a roof over your head.

    EE
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