Sell and Rent Back
Some homeowners who sell and rent back simply prefer the benefits of renting rather than owning - and without actually having to move. Their monthly rent may be cheaper than the mortgage payment and if you rent, you are not responsible for any repairs to the property - these concerns are then the owner's.
Homeowners who are concerned about falling property prices may also want to consider selling and renting back. This way, if you sell now, you lock in any profits at today's price and potentially make the maximum profit by also dealing without estate agents when you sell your property this way.
Selling your home this way also allows you to access the equity in your home without actually taking out a 2nd mortgage. It also appeals to those who want to avoid expensive equity release schemes when considering a second mortgage. These are generally aimed at older people and can be difficult to accurately evaluate the cost.
Also, perhaps a homeowner's worst nightmare is the prospect of repossession. This often happens when a homeowner simply cannot afford to pay their mortgage arrears, usually for a period of up to two months. Repossession not only affects a person financially - it can be an emotionally devastating experience too. The Council of Mortgage Lenders estimates 20,000+ homes will be repossessed during 2007.
One effective solution to the prospect of repossession is to do what an increasing number of people are doing - sell your property and then immediately rent it back. This is basically exactly what it sounds like - a cash buyer acquires your property from you and you then immediately rent it back from them.
Some people may also sell their home this way due to changing jobs, extenuating circumstances such as severe illness or bereavement or the need for a quick relocation for personal or work reasons. People who emigrate also find the sell and rent back option can be an effective solution. Couples who are going through a divorce can benefit from this strategy, as it allows one of the parties to remain in the home.
The advantages of selling and renting back are clear - you get to stay in your own home; furthermore you usually get to keep your existing furniture and fittings. Your weekly or monthly rent is assessed fairly and based on other comparable rentals in your neighbourhood. You don't have to deal with an estate agent or have to worry about your buyer changing their mind - and the sale goes through a lot faster.
You also usually have the option of buying your home back at a later date, once your financial situation has improved. Buying back your own property is usually at a fair market price for the type of home and area.
