Releasing equity on house with mortgage.

bowlinggeoff

Myself and my wife are in our early 60's. We have a £60K mortgage on our house paying interest only over a long term, the idea being that the payment in within our budget and that should we sell the biulding society will retain the £60K owing. The house is currently valued at £130K.

Because of the mortgage we cannot release the equity on the house under normal circumstances. What we would like to do is to sell the house to a reputable institution and then rent it at an agreed amount,thereby releasing the equity for us to invest for future use and still living in the house.

We think that this would be a good business investment for the institution as the house value will not doubt increase over the years, BUT we have no idea who to approach with the business plan.

can anyone help with suggestions?????

Bermuda_John

There are several ways to do this and through very different companies, with this sort of deal you would usually be selling your house to them for a value below the market value.

I believe, and i may be wrong, several would be property developers are interested in these sorts of "sale and leasback" deals as they are able to buy a property at below market value and gain a guaranteed rent.

You sell them the house and then rent back of them, but do you want to eventually buy the property back or do you just want to rent it for the forseeable future?

I'd be careful who you deal with as you may be seen as being vunerable in their eyes and they may try to take advantage of the situation.

Please tread carefully whatever you do and dont think the big companies are the mist reputable.

Ian_W

Hi geoff & welcome,
I don't know of any scheme where "an institution", by which I take it you mean a bank, building sociey or loan company, buys the whole of your property so you release the equity and retain the right to live in it as a rented property.

The nearest thing is what is generally termed "equity release" which comes in two basic forms. A lifetime mortgage - where you borrow an amount against the value of your home and instead of repaying it the interest is rolled up and recovered along with the capital when you both die or need full time residential care. Or a reversionary scheme - the lender buys a percentage of your house and receives the same percentage of the value when your house is sold in the future, usually under the same circs as above.

The umberella organisation for reputable companies in the field is SHIP - Safe Home Income Plans - and their website is HERE and there is an information sheet from age concern about it HERE.

Neither will allow you to release all the equity in your home and rent it back as far as I know and, this week, I think it was Which who critisised them as poor value etc. I think a lot depends on your age as to what you can get from these schemes. To be blunt, the older you are the quicker you'll peg out and they can collect!!

The only other co's who do anything like you're suggesting are those like National Homebuyers - STEER WELL CLEAR - they advertise in the national press "Homes Bought for Cash" and in truth will offer you 80% or less of the market value and though they will rent it back to you, you have no more security of tenure than any other tenant.