What is Lease Options?If the seller wants to stop paying mortgage on property and move on without selling at below its full market value, this is another way of not fully giving up ownership, but leasing the property for a period of time, usually between 5 and 15 years or more depending on the agreement between both parties. A lease option gives the buyer an option of buying the property at an agreed amount at a future date. This is common when a property has little or no equity.Selling a property through an estate agent in the current market can take several months. In some situation, the estate agents could ask the seller to reduce the price to create interest, but still, the property is not sold and the seller may be in dire need to move on, especially if the property is negative equity.
However, selling to a cash buyer a property with zero equity requires a discount of about 25% and the seller may not be in the position to reduce the price.Lease Options enables the seller, to grant the buyer an option to buy the property at close to the property's full market value based on today's market in the future. This enables the buyer to take over the mortgage payments, maintenance and upkeep. It gives the seller or property owner the freedom to move on in life without thinking of any mortgage payment.A typical example of a lease option is thus - let's assume a property is in the market for 100,000. There is an outstanding mortgage of 80,000, monthly mortgage of 500. In order to attract interest, the seller needs to reduce the property price to probably 80,000. In doing so, he will not make any profit at all from the sale and worst still, it could take between 6 to 18 months or more to sell. This means he will continue to pay the monthly mortgage.With lease options, the seller could grant us an option to buy the property for 90,000 within the next 5 years or at an agreed period of time. During this time, the buyer will be responsible for the monthly mortgage payment, carry out maintenance and total upkeep of the property. If he (buyer) chose to exercise the option to buy the property at anytime within the option period, the seller will make 10,000 profit after paying off the mortgage of 80,000. Should the buyer chose not to exercise the option to buy at the end of the period for any reason, or the seller chose not to sell, the property would be returned to the seller in very good condition probably with improvements made to it.
At this time, the seller has saved himself from the burden of paying mortgage, benefited from a long period of not even thinking about mortgage nightmare and the property had experienced significant capital growth.These are some of the scenarios where lease options apply:If the owner is facing mortgage arrears;If the owner is facing repossession, especially on a property with zero equity;If the owner want to move on quickly, burden of mortgage, council tax, maintenance;If the owner do not need lump sum of cas0h to move immediately;Lease Options is a free service and can be completed within 28 days in most cases.For further information on how to sell your house fast, property related query or lease options, please contact