Sale and rent back agreements are typically entered into by homeowners struggling to keep up with their mortgage repayments or who are already in arrears and cannot catch up. In simple terms the agreement comprises of selling the home and then remaining in the property as a tenant by paying rent each month. However it is essential that people understand the agreement and what it entails as they are not as simple as many believe them to be.

The first thing one has to understand about a sale and rent back agreement is that the company offering to purchase your property will not offer 100% of the full value of the property. In some cases homeowners get around 70% of the full value. Another very important factor is the rental agreement period. While you can remain in the property the rental agreement is typically fixed at a five year period. This means that any time after this you could be asked to move out of the property. Sale and rent back agreements are just one of the options that people with mortgage problems and arrears can look into. However it may not be the most suitable option. Anyone finding themselves struggling to meet their mortgage repayments should contact the mortgage lenders as soon as possible. It may be that an agreement can be made which would allow you to remain in your home. You may also wish to consider swapping mortgages, maybe to an interest only, to lower the monthly repayments. A sale and rent back agreement may work out but it is vital that you do your homework before rushing in to sell.