• Using a property lease option or instalment contract to help if you are due to repay the loan on your interest only mortgage.

    December 21, 2012

    Property Lease Options

    If you are about to have to repay your interest only loan, a property lease option or instalment contract could be the answer.

    According to a report in the Telegraph, an equity release loan could be the answer for many people who can’t afford to repay their interest only loan. Many thousands of people took out interest only mortgages 15 to 25 years ago, and very soon they will have to repay this loan.

    The problem is that many of these people are not in a position to repay this loan, as the lenders didn’t ask for a finance plan put in place in order for them to do so (as is the case now). Many people will have taken out an endowment savings plan at the time, but these have under performed and are unable to use this to pay the sum required or have already cashed this in and spent the money elsewhere. In a nutshell, this is the ticking time bomb millions of people are afraid of due to the unforeseen economic climate. Choices are very limited.

    Endowment policies have either been cancelled or are not expected to cover the outstanding mortgage. In the absence of an adequate insurance vehicle, which covers the outstanding mortgage, the owners are left with no other alternative other than to walk away from their investments and face the extreme financial distress.

    The only way out of this is through equity growth, which is very unpredictable. Essentially this is a no win situation for owners who have interest only loans. One way of getting out of this predicament is to find a buyer who can buy the property before the loan is due to be paid, property lease options and instalment contracts can help by getting a buyer who is unable to get on the property ladder today perhaps due to lack of big deposit or good credit, however, with time they can correct this situation and potentially be in a position to buy the property before the loan is due.

    I have helped sellers in similar situations by introducing them to buyers who can move in today with a view to buy in the future. Contact me, Reena Malra, to find out more.

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    About Reena Malra

    Connect with me: Google+ Reena Malra is one of the UKs most successful property investors and mentors. The strategies Reena has discovered and developed over the past few years take the focus off the price and put it on the flexible and convenient payment terms. This is how Reena can structure transactions to really benefit both the buyer and the seller. Reena specialises in property lease options, instalment contracts, rent torent, below market value (BMV), stopping repossessions, joint venture, delayed completion and tenant buyer strategies. She also runsworkshops and webinars, and offers property consultancy services and one-to-one mentoring.

    View all posts by Reena Malra

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