Sale and rent back agreements can be seen as a lifeline for those who are struggling to meet their mortgage repayments and fear repossession. However should you sell and rent back, as there are aspects that need considering.

One of the biggest pitfalls is that companies offering a sale and rent back agreement usually offer far less than the current value of the property. However there is the fact of a guaranteed sale providing both parties are happy to go ahead with the agreement. Another aspect is that although the indviduals can remain in the property after selling for cash, there is no lifetime guarantee. A typical agreement would allow you to remain in the property for around 4 years.

You also have to consider the fact that should you fail to keep up with the rental payments of the property, you will probable still end up having to leave the property.

A sale and rent back might be considered as an option for those in mortgage arrears or who are struggling with the repayments but there are other options that need considering too. Anyone considering looking into selling their home should ensure they choose a company that is regulated by the Financial Services Authority. The FSA took over regulation to ensure that all consumers got treated fairly after it was revealed that some companies were offering poor advice. A regulated company should sit down with you and make you aware of other options which may be more suitable. These could include re-mortgaging to take advantage of the lower interest rates at the moment and in the first instance speaking with the mortgage lender.