Should I Sale And Rent Back With a Mortgage on my Property?
Facing your debts is never easy. Trying to clear them is even harder. A lot of people that got into this mess know how difficult it is to become debt free, but they also probably know that the best solution to reach that goal is to sell your property.
Before you decide to sell, you probably already placed a mortgage on it. The banks will easily give you a loan if you agree on the mortgage, but what if this becomes not enough to cover your debts? Then you can try the sale and rent back mortgages option which is very popular around Australia and around the world.
How does it work? Well, first you need to have a property on your name on which you already have a mortgage. The bank won't let you sell the property unless you return what you owe them. To resolve this, you can sign an agreement with the bank and the buyer that you'll return what you owe to the bank in full right after the buyer pays you the full amount for the property.
At the same time, you should make the deal with the buyer in which they'll allow you to stay in your own place and this will be a classic sale and rent back mortgages deal. You should make an agreement in which the new owner of the place will let you stay as a tenant in your place for a fixed period of time which you can negotiate later on again in case you both like the deal you've already made.
This kind of deal is good because you'll cover your debts, yet you'll still live in your own place, or you'll be able to use the property that had a mortgage. Of course, you won't be the owner of these places, but this is not necessarily a bad thing. First, after you do this, you won't need to care about paying taxes and taking care of the place because you're no longer obligated. It's simply not yours. All this is now a job for the new owner.
Another good thing is that you liquidate your property and you release the money that was previously stuck. You can operate with them and cover the holes that must be covered. Some of the money must be returned to the bank but the rest can be used for your own purposes. Of course, this means that the debt toward the bank is not greater than the amount you'll receive for your property.
The sale and rent back mortgages is the best way to keep your property and still use it like you used to before, but in the same time you get an amount of money that the property is valued at. The money will be used for paying off your debts, but also for purposes that you most need at the moment. And the best part - you still get to use the property like before.