parents are interested in selling house & then rent it back

madmaxi

Hello there
new to this site, looking for any information on selling a house then renting it back... my parents are thinking of doing this and have already been in touch with a company who have said that they will give them the full market value but take 20% in admin fee's etc they will do all the repairs (the house is bit worse for wear) and then they can rent it back , I've tried to find the company online and the site is still under construction.. has anyone gone down this road and had a positive result...or is it the "too good to be true" saga?
My parents still have a small amount outstanding on a mortgage and are both in their early sixties
any info will be greatly appreciated
thanks
Max

dunstonh

why would they want to gift 20% of their current property value to a company?

Are they in financial difficulty?

Gorgeous_George

Of course it's too good to be true. Market value is likely to be less than you would get on the open market (so why is it called market value?).

Then, a further 20% is lost in admin fees. How can admin be related to property value? This implies a house costing £50K would cost £10K to administer but one costing £500K would cost ten times as much!

I can understand their desire to free up capital from their home but I would recommend selling and renting elsewhere or even buying cheaper.

There have been threads on here recently on this subject. May be worth searching 'equity release'.



GG

Alan_M_2

Go and talk to a financial advisor, there are much better ways to release funds.

We've just done this for my parents, I've guaranteed a normal mortgage for them so they could release equity and have an easy life, they are in their 70's - a couple in their early 60's should have no trouble - I've found mortgage companies happy to lend to 85 years old as long as there's an ability to repay.

That way you keep the house in the family and no one else makes any money off it.

madmaxi

hi there
thank you for your reply's
think parents money situation isnt that healthy, my mum who is 61 and is still working and dad is on benefit, the house needs some serious TLC and there isnt the funds to do so.. so i think they are looking at this as a option to keep their home and get the work done on it ....just dont want them to be ripped off...

Alan_M_2

Can you help them with a normal mortgage?

silvercar

have they any guarantee they will not be turfed out after their 12 month initial tenancy ends?

madmaxi

Not quite sure how far they have got... mum rang me last night to tell me that they were thinking of doing this.... im in the armed forces serving abroad and just wanted to do abit of research for them...

TJ27

I have relatives who simply sold their house, then put the money in the bank and pay rent on a slightly smaller house using the interest earned.

Might be worth thinking about.

dunstonh

releasing capital like that would wipe out their benefits so they could lose a lot more than 20%. There are better ways of doing this.

madmaxi

Thanks to everyone for the advice.... I shall call my parents and get them to speak to a financial advisor
cheers
Max