Advice re Sell and Rent back your home.....

willing2learn_3

HI everyone

i spoke on here some weeks ago concerning my parents who were trying to get a remortgage on their home. This looked promising with one company, however they have now asked for my parents to make a regular monthly payment for three months of an amount that they cannot meet.

My parents are confident they can afford the remortgage but it's the present financial difficulty (having to pay over £800 in excess of their remortgage payments for 3 months - then the remortgage would be agreed) that they are struggling with.

As a result, they are looking at schemes for selling and renting back your home.

They realise that this may not be the most ideal option, however they are weighing up all the pros and cons.....considering that if they were able to go ahead with the remortgage this would mean paying 3 times (£320,000) as much as they would have had to if they could just continue with the currrent mortgage, unfortunately this is not possible.

Selling and renting back could be the only option that would help them to clear their debts and stay in their property.

So, i am putting this 'out there' to see if anyone can advise at all on these issues. It's about making the best decision with the situation in hand.

Thanks for listening and hoping someone might be able to help, even if it's just to talk things through.

My parents are aware of this thread and will be reading it.

Thanks again

chez000

Ive heard a few horror stories about some buyand rent back companies, for example some where the rent after the house is sold is nearly as much (or more) then the mortgage, some where the house is sold at a price hugely under the market value, and some where the house is rented back only for 6 months and then the company will try and sell it - so can be worse than helpful.
Maybe that there are some reputable and trustworthy companies out there, I dont know about those, but this does seem like a risky option, and there are probably better options available,

What is the level of debt, what is it for, how much equity is in the house, what is your parents current financial situation and how has it changed ?

Forgive all the questions, but the more detail you post the more likely it is some one can offer advice.

posting a SOA would prob help aswell

thanks

chevalier

I can only echo the above, ref sell and rent back. What about equity release instead, that way your parents still have an interest in the property. I don't know much more about these, than I have written but they might be an alternative.

Why do they need to do something this drastic?
chev

willing2learn_3

chez000 wrote: »

What is the level of debt, what is it for, how much equity is in the house, what is your parents current financial situation and how has it changed ?

The level of debt is £130,000, that's for the mortgage (which is part loan that was taken out on the house and part original mortgage). The present house valuation is £210,000.

My parent's current financial situation is that my father earns (on a good month, my father is self employed) about £3500/month. My mother does not earn. They have pensions of £550 per month (total)......their financial situation hasn't really changed, the repayments are just too high for them.....

thanks for listening

willing2learn_3

chevalier wrote: »

I can only echo the above, ref sell and rent back. What about equity release instead, that way your parents still have an interest in the property. I don't know much more about these, than I have written but they might be an alternative.

Why do they need to do something this drastic?
chev

I know nothing about anything it seems! My parents don't usually discuss any of this stuff with me, i don't have a mortgage of my own.....i've never had to deal with this stuff. Call it naive if you like.....looks like i'm going to go through a steep learning curve now.

I don't know why. Perhaps my father can say why, but he's just had to go out. I will ask him when i can, probably tomorrow now.

I know nothing about equity release scemes myself....but i get the impression they've already thought of this option.....and it's not an option for them.

beanielou

In a word no to sell & rent back.

IWasWondering...

Sell and Rent Back. I wouldn't recommend it. Heard too many horror stories on TV about people selling well under valuation then losing the house because the 'new' mortgage on the property wasn't paid and the house/s got repossessed leaving the sellers out of pocket and homeless.

silvercar

There are some facts missing on their mortgage. Clearly if they can get a remortgage deal in 3 months then that is the way to go.

You haven't posted all the facts, I would suggest you gather the following information and post on the mortgage board. You need to find:
property value;
mortgage amount outstanding;
interest only or repayment mortgage.
their age.

Together with their credit rating, in particular whether there are recent mortgage arears.

Reading between the lines I would guess that your parents have had some problem meeting their payments but have been told that a remortgage is possible with a few more months correct payments. I would also guess that they were on a fixed rate deal that has come to an end and so the repayments have shot up making things unmanageable. All guesswork from your posting.

If this can really be solved by making 3 months payments, then this is far more sensible than selling and renting back (which would take weeks to arrange in any case). If the problem can be solved this way then its worth begging, borrowing or stealing (OK, maybe not stealing) the money to make those payments. To get a mortgage that they can afford will make their home so much more secure than sale and rent back.

If on the other hand the repayments are going to be a struggle for years it may be better to get out now. The way to do that is to sell the house themselves by going with a good estate agent at a realistic price, not by giving away 20-30% of the equity they have gained.

itsnever2lateisit?

There was a horror story reported on our local news BBC S East yesterday where an elderly couple had sold and rented back their house (to raise money for their retirement) they had lived in the house for 50 odd years but the company they sold to has gone bust and now the house is to be repro'ed and they are out on the street:mad:

There are some good links about sell and rent back here http://search.bbc.co.uk/cgi-bin/search/results.pl?q=rent+back&uri=%2Fkent%2Fnews%2F&go.x=24&go.y=18

Maybe an equity release scheme might be better, but IMHO I echo the post above, dont touch it

tallyhoh

Taking a big chance with sell + rent back. By its very nature you will sell below market value & there are NO guarantees that you will be able to stay there after.

Would it perhaps be better if your parents posted up an SOA? They are on a fairly good income. Better to be able to clear any debts by ruthless cutting back for a while than risk selling their home at a loss.

chappers

Don't do it sell up by all means but these people will give you something like 70% market value heard one of them on Radio 5 today, kept going on about the service they provide, I think he knew that he was on sticky ground as he kept stuttering in his last snetance he actually let slip what we all know and that they're in it to make a profit, he kept blabbing on about long term investment but we all know that just aint always the case.