This financial tool can work well if you are no longer wanting to stay in the property, and selling makes no sense due to time constraints, house needing a lot of work you can’t afford, negative equity etc.
What we can do is pay your mortgage (and sometimes arrears) to your lender on time every month, you vacate the property and we place a tenant in your property and the rent is ours. Our profit is the margin between the rent and mortgage amounts.
Most of the time we will require a consent to let from your mortgage company, but we can help you with this.
We will also agree a figure with you at which we can purchase the property from you at an agreed price at some point in the future. Option periods can be 3 to 10 years during which we can buy your property.
Your property in current condition is worth say £100,000. Your current mortgage costs say £475 per month. Your current mortgage balance is £90,000
We take over your mortgage payments to your lender and place a quality professional tenant in your home, who pays us say £700 per month in rent. What is left after making your mortgage payment is our profit.
Where the option part comes into place is that, in an agreed timeframe, say 4 years, perhaps shorter or longer, we have the exclusive option to purchase your home from you at a price we agree now. Normally its current market value.
Once again we will cover your legal fees.
The benefit to you is that you can immediately walk away from the property knowing it is being paid for and looked after and with a seller lined up.
Should you be in arrears and at risk of repossession we can often pay these arrears and deduct this amount from the agreed option sale price.
This will save your credit rating. You do not want a repossession on your credit file.
