Sell your house and rent it back

Are you looking to sell your house and rent it back?

If so read on and I will try and give you some of my hard earned education on the subject.

I'll start by going over some of the reasons why you may want to sell and rent back:

Financial Difficulties:

If you are struggling with your mortgage repayments, have mortgage arrears or are facing repossession and you need a way out of the problem, you have the following options:

A) Take out another loan - this is a very short term option and should only be taken if you have a clear plan of paying back the loan. This can add fuel to the fire and increase the amount of debt you have to re-pay so be careful and thorough in your research. 

B) Release equity from the property through a re-mortgage. Again this will only increases the amount of debt and mortgage re-payments so should be taken with caution.

C) Increase your income or decrease your outgoings or both. This is an obvious option and if viable should definitely be considered.

D) Downsize or move to a cheaper area.

So in this case, unless you want to downsize, move to a cheaper area or increase your income/decrease your outgoings the best option is to sell your house and rent back

Equity Release

Some people want to enjoy their money rather than have it tied up in their property. If this is the case you can either take out a loan, release cash through a re-mortgage or sell and rent back.

Divorce or separation

If you are going through a divorce or separation and you or your partner want to stay in the house, selling to rent back could be a good option allowing you to split the proceeds of the equity. 

So how does it work and who do you sell to?

A lot of private investors and property companies are offering this option and they generally offer to buy your property within a set of dates for a pre-set price dependent on the surveyors valuation. Once you have sold the property, they then become your landlord and you rent the property from them as any tenant would.

Some offer a buy back option which allows you to buy back the property within a pre-set date. This is a good option for people who have temporary financial difficulties and enables them to take ownership back at a later stage.

In summary rent back is a fairly new scheme and has many benefits but make sure you trust the company or individual you are dealing with and check their terms and conditions, after all you don't want to be evicted shortly after you sell!