Should I sell my house to rent back?

sarah7610

Hi, over the last few months we have got ourselves into debt that we can't find a way out of. We haven't gone mad over Christmas but bank charges aren't helping and now we are in the situation where we can't pay the mortgage this month and don't have any money for anything else.
Our wages only seem to cover our overdrafts so every month we are back to square one and it's got us to the point where we are so stressed with the situation it's putting a strain on our relationship and not doing the kids any favours either.
I was looking at websites which specialise in buying your house and then renting it back to you although they only pay 85% of the market value and at the moment if I was to do this the rent is bound to be more than my mortgage, however I would be able to pay off debts with the equity.
Does anyone have any insight on these companies or any advise on what we should do as we can't go on like this any longer.
Thanks for your time
Sarah

SuzySu

Hi Sarah
Can't really advise on whether to sell your house to one of these companies but wondered whether you have put an SOA on here yet for peeps to have a look at and to offer some advice.

We were in a similar position to you just over a year ago and had to sell our house. However, we did not use one of those companies as I think they rip you off. I am now renting (and yes, the rent is a lot more than the mortgage) but it did allow us to pay off some other debts thereby reducing our monthly outgoings.

RAS

Sarah

This is not generally a good idea. If you decide to sell the house you need to do so at full price and then rent. I know you would like to stay there but you can be required to move out after the initial 6 months tenancy and lose 15% of the value, assuming you are not gazundered at the last minute.

You need to get you finances sorted, so you pay the mortgage and household expenses and then the debts.

Start by

1. getting yourself and OH new basic bank accounts with companies not associated with any of your exisitng banks or other debts
2. Doing an SOA.
3. Speaking to a debt charity.

sarah7610

Thankyou SuzySu and RAS. I have no clue with all this as I've never been in this situation before so forgive me for being a bit thick but what is an SOA and how do I find out whether a bank is associated with my bank?
Sarah

HappyMJ

SOA=Statement of affairs it's basically a budget seeing what's coming in and what's going out.

Stop paying the bank charges is the first step even if it means leaving the account overdrawn getting the mortgage paid is priority number one. Unsecured debts are always paid after the full payment has been paid on the mortgage. So set up a new bank account get your salary credited there. Pay something (anything) to the mortgage from your salary as soon as it is credited then figure out what's left for everyone else.

With no late payments on mortgage it is so much easier to negotiate with the bank. Can you extend the term of the loan? Can you wrap up higher interest loans into the mortgage? Can you switch to interest only for 6 months? Selling to these buy and rent back companies is just about always a bad idea.

Tixy

A SOA is a statement of affairs and is basically a monthly budget - template here - http://www.makesenseofcards.com/soacalc.html

Here is a list of recommended free debt advisory services - http://forums.moneysavingexpert.com/showthread.html?t=2077631

Remember your mortgage is a priority debt so you should pay that before or in preference to any unsecured debt repayments (credit cards etc). If you are struggling this month you could use this letter - http://forums.moneysavingexpert.com/showpost.html?p=21937969&postcount=52 - to offer your unsecured creditors token payments whilst you seek advice.

DVardysShadow

sarah7610 wrote: »

Thankyou SuzySu and RAS. I have no clue with all this as I've never been in this situation before so forgive me for being a bit thick but what is an SOA and how do I find out whether a bank is associated with my bank?
Sarah

Go to this thread - it has a link in the first post to an online SOA, plus other useful info.

Start with the SOA - because this will help you understand the problem - and the rest of us if you post you SOA on here.

Selling your house and renting back might be a solution, but not for most debt problems, so understand your problem first.

sarah7610

Thankyou to everyone again, all I need to do is try and get a new bank account which I'm thinking may be harder than it sounds. My Mortgage company are usually really good as most months my mortgage is late (only by a few days) as I get paid 4 weekly rather than monthly which is part of my problem with the bank charges. My Mortgage company tried to come up with a solution but couldn't which I did find a bit strange as I am not the only person who is paid 4 weekly. I can't pay so I am a month in front as this would just come off my mortgage balance and not be counted as a monthly payment.
I think my wage being 4 weekly is my downfall as all DD's are set to a date and there's no point in me changing the DD's dates as my pay date changes all the time.
I have done an income and expenditure form which includes both mine and my partners so I will try and get it posted on here.
Thanks

lamarsi

hi sarah, a couple of years ago i fell behind with my payments and ended up in 8 months arrears, my friend who had a gambling problem also ended up in 6 months arrears, i manged to work out a payment plan which added £50 extra per month and after sticking to it for 6 months they consolodated them so now i'm back on track. My friend decieded to sell his to a buy and rent back company but they only gave him 82k on a house which was worth 120k, and buy the time he'd paid an exit fee etc on morgade he still had debts of around 40k and no home. Needless to say he couldn't pay the rent and ended up in a real mess. I would seriously only look at this as a very last resort and try talking to your providor 1st and foremost

DVardysShadow

sarah7610 wrote: »

Thankyou to everyone again, all I need to do is try and get a new bank account which I'm thinking may be harder than it sounds. My Mortgage company are usually really good as most months my mortgage is late (only by a few days) as I get paid 4 weekly rather than monthly which is part of my problem with the bank charges. My Mortgage company tried to come up with a solution but couldn't which I did find a bit strange as I am not the only person who is paid 4 weekly. I can't pay so I am a month in front as this would just come off my mortgage balance and not be counted as a monthly payment.
I think my wage being 4 weekly is my downfall as all DD's are set to a date and there's no point in me changing the DD's dates as my pay date changes all the time.
I have done an income and expenditure form which includes both mine and my partners so I will try and get it posted on here.
Thanks

Sarah, I really have to take you to task for using 4 week pay as an excuse for your difficulties. When you have monthly bills, you never get the same bill twice between paydays and once a year you get a holiday for each bill on one payday. So 12 paydays you must budget for the mortgage and on the 13th you get a rest.

Now tell me, what date is your mortgage due and when will you get your pay in January?

**Upsy_Daisy**

I used to get paid 4 weekly and was gutted when they switched it to monthly - because I had 1 payday a year when the money was "mine all mine"

You have to be really disciplined and set up another bank account for all your D's etc and transfer the money you need into that account every 4 weeks - a bank account which pays interest is ideal for this as sometime the money will be hanging around for a week or two before the bills come out
Go for an internet account if you haven't already got one so you can check your account every day

Please don't sell your house to a rent back company - you will be an Assured Shorthold Tenant with no Securty of Tenure and when they evict you after the 6 month period ends you will probably be classed as intentionally homeless by your local council