Sale & Rent Back

Sale and rent back (sometimes referred to as 'sell-to-let' or 'mortgage rescue') is an option you may wish to consider if you find yourself unable to meet your mortgage repayments. Sale and rent back gives you the opportunity to remain in your home by selling your house back to the mortgage lender. In return, you become a tenant and pay rent. However, these schemes are generally considered a last resort: there are several drawbacks to consider.

Sale and rent back schemes generally involve your lender, or sale and rent back company, buying your house for less than its market value: typically they will pay between seventy and eighty percent of its value. You will then pay rent, which could be lower, or higher than your mortgage repayments, depending on the market rate. The money you receive from the sale is usually used to repay your mortgage debt, and if applicable, any further debts you have, such as those on credit cards and personal loans.

Ensure you consider all your options before you commit to a sale and rent back scheme. They are currently exempt from statutory regulation, which means that the quality of service you receive may be very poor. In some cases, you are only guaranteed to be able to rent your home for six to twelve months, which means that after selling your home for less than its worth, you could still be evicted within a year.

There are many other options if you find yourself unable to meet your monthly repayments, such as state benefits, and payment holidays. These options are detailed in Missing Payments. Ensure you consider these before seeking a sale and rent back scheme.