Adverse Mortgages UK

Homeowners experiencing problems with their mortgage repayments should avoid entering into a sale and leaseback scheme, it was claimed today.

A sale and leaseback scheme allows a borrower to sell their home but continue living in it by renting it back from the company that purchased it.

However, such products are not currently regulated by the Financial Services Authority and Teresa Perchard of Citizens Advice said they are often not as straightforward as they first appear.

Many people have been forced to sell their home for well under its market value when entering into such a scheme and Citizens Advice has received complaints from people who have ended up homeless within a year of signing a sale and leaseback agreement, explained Ms Perchard.

She added: "Mortgage lenders have a duty to treat borrowers in trouble sympathetically and fairly, so we would we would urge anyone with mortgage arrears to first talk to their lender."

A recent survey by the housing charity Shelter found that six per cent of people had used a credit card to make a mortgage or rent payment in the past 12 months.

It advised borrowers worried about their ability to make payments to seek advice rather than resorting to more expensive forms of borrowing.

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