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

mum2one

Its the biggest con on the market, the rent back period, the minimum they can offer is a 6 month short let, the maximum that a company can offer in a rental agreement is 3 years, so at the end of 3 years, they could kick your parents out.
Theres no good press anywhere, the best option would be look at equity release in the property x

tallyhoh

Equity release is good if your parents are not planning to leave the house to anyone & no family member will be left residing in the property.

My FIL took out equity release on his home in 1996 for less than £20,000 (£19,600 to be exact) he had no mortgage. I was obliged to sell his house in 2006 to pay nursing home fees, the amount owing to the building society was £74,950!!! & that was with a well known building society & perfectly legal.

willing2learn_3

silvercar wrote: »

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.

Thanks SilverCar

I understand this is all guesswork, that's what it's like for me as they've never discussed this stuff with me.....in fact when i try to discuss it i'm met with a lot of resistance. All i want is to help.

I have just spoken to my father and he says that a selling and renting back scheme is their best option. He is 62 years of age.

The property value is £210,000, the mortgage amount outstanding is £130,000, it is a repayment mortgage. They have recent arrears of £4,500.

Their is a posession order on the house which will go through on May 5th, or thereabouts. For this reason they cannot go about the process of selling the house through an estate agent.......and equity release woldn't work. My father says it would give them nothing back in view of what they still have outstanding on the house.

Sorry this is all very simplistic, but this is something i have never had to deal with.

Jacks_xxx

:wave: Hiya honey,

Without knowing the whole story it's difficult to be confident that I'd be giving you good advice, but I can tell you that sell and rent back is handing over control of your parents home to someone else who cares about the cash and not your parents, and they will have no qualms about selling that home from under your parents as soon as they think it's prudent.

My friend was out of her house about 9 months after signing on the dotted line with one of these companies - with three kids in tow.

She'd asked them about how long she could expect to stay, and they gave her all the "property is a long term investment" crap and told her not to worry about the dim and distant future.

She was studying and she planned that in three years she'd be working, the kids would all be at school and her financial situation would be much stronger then - but 9 months later she was homeless.

A couple of large companies had relocated to our area, and when local house prices suddenly shot up the company that had bought her house (for £40k less than the local estate agent had valued it at) cashed in....

My advice to you is to beg your parents to post the full situation on here and we'll help all we can.

As far as I can tell from what you've said we're talking about a fairly small amount of money (£2400?) that makes the difference between the new mortgage and life continuing as normal or being thrown to the wolves. (The equity release and sell and rent back chancers.)

Perhaps it might be a good idea to focus on ways that they could manage to find that extra £800 a month for three months rather than getting tunnel vision and focusing on short term solutions.

If in a year or sothey're out on their ear they'll wish they had, I promise you.

Love to all of you,

Jacks xxx

silvercar

One of those times when I wish I wasn't right. Comments in red.

willing2learn wrote: »

Thanks SilverCar

I understand this is all guesswork, that's what it's like for me as they've never discussed this stuff with me.....in fact when i try to discuss it i'm met with a lot of resistance. All i want is to help.

I have just spoken to my father and he says that a selling and renting back scheme is their best option. No doubt he has spoken to a smooth talking salesman convincing him they can help. He is 62 years of age.

The property value is £210,000, What have they offered, £150k, 160k? Enough to clear the mortgage and a little more? So they would be giving away 50k+ to this guy!the mortgage amount outstanding is £130,000, it is a repayment mortgage.They should be asking the lender to switch to interest only for a short time. They have recent arrears of £4,500.Thought that might be the case

Their is a posession order on the house which will go through on May 5thI'm no expert, but they can get this overturned, they have to go back to court and show how they can clear the arrears over a time and that they can afford the mortgage. AS there has already been a possession hearing, they have to take action now., or thereabouts. For this reason they cannot go about the process of selling the house through an estate agent.......and equity release woldn't work. My father says it would give them nothing back in view of what they still have outstanding on the house.I doubt sale and rent back will give them much either!

Sorry this is all very simplistic, but this is something i have never had to deal with.

Is there a family member who could help them out? If someone could lend them the money they could have a charge on the house so they would get their money back on sale but the sale couldn't be forced.

Those recent mortgage arrears are going to make getting a new mortgage harder; the rate won't be so good. But moving to an interest only mortgage would lower repayments.

As your father is 62, I'm guessing his mortgage was due to finish in the next few years. Is there an endowment policy lurking around that he could cash in or sell? or was the mortgage all repayment. When was the mortgage due to finish?

willing2learn_3

Thankyou Jacksxxx

I have printed out the threads here for them to see, also i have suggested they phone Shelter tomorrow for advice.....as i think they have views on the sale and rent back schemes.

I think my father is really concerned that they only have about 3-4 weeks to sort the situation out. He doesn't really do the internet either.....He just gets confused with it all, especially this site where there are so many threads that it's easy to lose your own.

Ok, it's a long shot, but i know my father would be up for talking to someone over the phone if they felt they could advise him. He's a highly respectful person, doesn't intrude on other's at all and wouldn't abuse such a situation....rather he would just listen and/or act on advice.

willing2learn_3

SilverCar

thanks again for your time!

I've just told my father what you have said and he is unsure that at this late stage anything can be overturned.

I guess i'm wondering....what do they do, write to the judge and ask for another hearing? I am so sorry i am souding so naive about all of this!

real1314

You haven't said what the proposed rent might be, but it'll either be a high enough figure to justify the sell-2-rent company's outlay (likely more than they can afford - just using the house pay off to live is no future) or it'll be low, until 12 months have passed when they'll whack it up, or as others have said, they'll sell it after 6 months anyway. There is NO security in these type of deals.

Tell them to cut all unneccessary expenditure or they may lose their home. A stark choice to make, but it's the one they face.

willing2learn_3

silvercar wrote: »

Is there a family member who could help them out?

Family have offered to give them the £4,000 they need to get the lending company to agree the remortgage. Parents worried about taking it.

I think they feell that it's all too much for them, with the interest involved over the long term.


Thanks EVERYONE who's posted here. I am using my parent's computer and have to leave to go to my own home now. I will check in again tomorrow and will leave them with a print out tonight.

willing2learn_3

real1314 wrote: »

Tell them to cut all unneccessary expenditure or they may lose their home. A stark choice to make, but it's the one they face.

Thanks for your reply

The problem is that they are saying it's too late. It's about making a decision in a bad situation now i guess? I'm sure they have learned from this but right now their expenditure seems irrelevant? They are not spending much in any case and haven't for years.....I do hear your point, it's just that right now it's not likely to help. Thankyou though.