Although many are losing faith in the endowment mortgage market, a new trend appears to be emerging that could help those with more than one property. The sale and rent back market appears to be rivaling endowment mortgages in terms of returns and are more available to those with bad credit histories. Many consumers have been disheartened by the returns on their endowment mortgages. Although many companies are still bringing in the money, the profits just are not being passed on to those holding endowment mortgages. This has left many in search of new forms of income and many appear to be checking out the rent back option.Michael Holt, of financial advisor SYH Charterhouse, says: “I am amazed by the speed at which sale and rent back is catching on. A surveyor told me he values 15-35 homes a week in Manchester and Liverpool. The volume is huge. Typically sale and rent back applies to properties worth about £170,000, where owners have adverse credit histories. At the end of a fixed rate mortgage around 5%, their only option might be a Standard Variable Rate (SVR) loan costing 12%. If they don’t sell, they will probably be repossessed.”
Related reading: Endowment Mortgage
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