What are Sell to Rent Back agreements?
A sell to rent back plan is an agreement that enables homeowners to sell their properties to a bank, investment company or individual, and then continue living in the home by renting it back from them.
Why would you want this?
These agreements are typically attractive to homeowners who are struggling to manage their bond repayments. As a way to prevent the bank from repossessing their property the owners would approach a company that offers the Sell-to-Rent-Back option.
If you find yourself in a situation where you are unable to manage your monthly bond repayments your first step should be to contact your bank or mortgage lender. Contrary to popular belief, banks are not trying to force people out of their homes. Property Repossessions are a long and expensive process.
Your bank would rather refer you to a reliable Debt Counsellor who, after assessing your finances, will offer you a number of solutions to help you get back on your feet.
After contacting your bank, you may begin exploring the option of Sell-to-Rent-back.
There are number of institutions available in South Africa that you can approach.
These investment companies will offer you up to 70% of the true market value of your property.
This is typically a very troubling time for you and your family, therefor the sales are often concluded very quickly and very discreetly.
If you choose this route, ensure that your have your own valuation done by an estate agent or certified property valuator. This will ensure that you get the maximum payout for the sale.
After, the sale is concluded and your existing bond is settled, use the extra funds to settle your outstanding debts. Your full focus should be on restoring your finances to enable yourself to buy your property back, or buy a new property.
Sell To Rent Back agreements have the advantage of offering you protection from repossession and a blacklisting, but you should realise that this is only a temporary solution to your problems.
Don’t sit back and be content with just renting your property forever. You can be a homeowner again, it just takes a little more effort.