Here at Fast Property Sale Network, we have a number of creative solutions to help sellers with their circumstances allowing them to move on with their lives.
Lease Options is a combination of a “Lease” and an “Option”.
A lease option (or lease purchase) is the abbreviated form of the appropriate term lease with option to purchase. It is a type of contract used in residential property investment or purchase.
Lease Options derived from USA and Australia where they’ve been used successfully for the last 30 years. It is starting to become an effective tool for helping motivated sellers of property move on with their lives within weeks.
Assuming that you need to sell very quickly, via estate agents in the current climate, it is extremely unpredictable and it could be between 9 to 12 months before you sell your property and in the meantime, you would be advised by the agents to keep reducing the asking price to create interest.
Often selling a property for cash is not a preferred option or practically possible. This is more often the case when property has little or no equity in it. Cash buyers require discounts of 25% of open market value therefore, not all sellers are in a position to reduce the price. If a seller needs to stop paying their mortgage and move on without selling property at below its full market value then we can offer you an alternative called Lease Options.
A typical lease option contract is between two parties: the tenant (Us) who will occupy a house or apartment, and the landlord (You), who owns the property. During the term of the lease option, the tenant (Us) pays credit to the landlord (You) toward the value of the property, and in exchange is permitted to occupy the property.
With Lease Options, you as owner of property, give us an option to buy your property at close to market value based on today’s market in the future. The option period can be between 5 to 15 years. In the meantime, we’ll take over your mortgage payments and become responsible for the up keep of your property’s maintenance. To put it another way, we are ‘leasing’ your property. You can then move out of property without any further burden of mortgage. When we exercise our option to buy, you may make a profit that would otherwise be impossible to achieve had you sold today.
Here’s an illustration for you:
Your property is on market for £100,000; your outstanding mortgage is £80,000 and your monthly payment is £600, you’ll most likely need to reduce the price to around £85,000 to attract an interest in an open market. This means that you won’t make any profit at all from the sale of your property. It could take between 6 to 12 months before you actually complete sale. During this time, you’ll be making mortgage payments of around £3,600 to £7,200 costing you thousands!
However, you could agree to give us an option to buy your property at £90,000 anytime within next 5 years, we’ll take over your mortgage payments within 4 weeks. When we exercise our option to buy property from you then you’d make £10,000 profit after paying off your mortgage of £80,000.
For any reason, should we choose not to exercise our option at end of agreed period then property would be returned to you probably with improvements made to it. By that time, you would have benefitted from a long period of being mortgage free plus significant capital appreciation.
Lease Options suit the following situations:
- Seller needs to move on immediately without being committed to their mortgage.
- Seller has mortgage arrears and/or is facing repossession.
- The seller does not need a large lump sum of cash immediately to move on.
- There is little or no equity in the property.
- Seller wants to secure a price that is close to today’s full market price regardless of the state of the housing market in the future.
- Service is free and takes approximately 28 days.
- Lease options are often used by tenants with a poor or limited credit history, who would not qualify for a typical mortgage.
What would becoming mortgage free do for you?
