Brentwood, United Kingdom (PressExposure) November 13, 2009 -- A recent warning from housing and homelessness charity Shelter urges homeowners facing financial difficulties and struggling to fight off repossession to beware of sale and rent back schemes.
Despite the fact that these schemes became regulated by the Financial Services Authority (FSA) from 1 July 2009 after pressure from Shelter and the Citizen's Advice Bureau, the charity says there are still unregulated firms out there offering the deals illegally, and that they are exploiting vulnerable homeowners.
Sale-and-rent-back schemes often seem like the only option to borrowers in arrears facing repossession. They involve selling your property - often way under market value - and then staying in the house as a tenant paying rent at the prevailing market rate. But all too often homeowners are evicted within months because they were only offered a 6 or 12 month short hold tenancy or because the sale and rent back company sold the property on to a buy-to-let landlord who then sold up or went bust.
Thankfully for the over 55s, there is another option. This one is safe, regulated, and providing a Safe Home Income Plans recommended scheme is used, will guarantee you stay in your home for the length of the scheme and will never owe more than the value of the property ('no-negative equity guarantee'). SHIP endorsed plans also guarantee no debt is left to your estate.
Bower Retirement Services specialises in providing independent financial advice and their specialist expertise lies in the equity release field. Managing Director Geoff Charles says that by releasing the equity tied up in their property, homeowners can benefit from a financial boost without fear of losing the property or being evicted, and better still, they'll be free from monthly repayments. "Equity release can also be used to consolidate debts or pay off an existing mortgage," says Geoff. "A Lifetime Mortgage allows you to release cash locked into your property so that you can use it to pay off a mortgage and/or debt and be free from monthly repayments, whilst staying in and retaining full ownership of your home."