Should You Sell And Rent Back Your Home?

For those of us who are struggling with money there are now many options available other than bankruptcy. One of these is to sell your house and rent it back. This gives you a lump sum to pay off your mortgage and also hopefully any outstanding debts.

However, as attractive as this sounds there are some serious disadvantages to the system which need to be taken into consideration before going ahead.
The biggest drawback is that homeowners are selling their property for less than it is worth and will then end up paying the equivalent of the new owner's mortgage. These companies are often deliberately targeting those who need or want to sell in a hurry and taking advantage of this to buy a property for less than it is worth.

As this industry is not at all regulated there are many shady dealers out there who are out to make a quick buck and will think nothing of giving a vulnerable borrower a rough deal.

In addition, in the longer term often there is no guarantee on the tenancy agreement and in the worst case a previous owner could find themselves evicted at the end of a six or 12-month assured short hold tenancy having sold their home for a bargain price.

Some smaller companies do not keep the properties on their books for long and often sell them on to buy-to-let landlords. If that landlord decides to sell, or goes bust, the original homeowner will find themselves kicked out.

So if it is so bad why do people do it? Selling your home for tens of thousands of pounds less than it is worth is not an attractive prospect. But those fearing repossession due to mortgage arrears and facing large personal debts may see it as a simple way out of trouble. The deals are usually very quick and hassle free.

Companies claim that the homeowner may only get 85% of the value on the open market anyway and they guarantee a price between 70% and 90% depending on the valuation. It is best to get independent financial advice before signing anything.

If you would like to find out more about property why not ask AnswerBank Property.

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