Home Equity

Mortgage Forbearance vs. Sale and Leaseback

By Tom Burchnell

If you’re dealing with hardships that make it a challenge to pay your mortgage, you may be looking for ways to ease the burden. Mortgage forbearance is one such solution. It enables you to put a hold on your mortgage payments for a set period, which can provide some much-needed relief. 

While forbearance is a common option for homeowners in need of a little financial relief during difficult times, there is another: a sale-leaseback. Here, we’ll compare these two solutions so you can find what works best for you. 

What They Are

Mortgage forbearance is an agreement between you and your lender that involves temporarily pausing or lowering your monthly mortgage payments. It doesn’t forgive your mortgage, but it does defer your regular payments for a set time. Once your forbearance period is over, your payments resume. 

A sale and leaseback (also called a sale-leaseback) is a solution in which you sell your home to a company. Instead of moving, however, you lease your home back from the company. You negotiate a lease fee with the company, which you then pay each month instead of your mortgage payment. 

Comparing Forbearances and Sale-Leasebacks

Now, let’s go a little further into detail about mortgage forbearance and sale-leaseback programs to help you figure out which solution might be the best one for you.

Mortgage Forbearance

With forbearance, you don’t get rid of your current mortgage. Instead, your lender places a temporary hold (or reduction) on your required monthly payments. It doesn’t eliminate your payments, but a temporary stop can be just the relief you need during financial hardship. 

So, what happens when your forbearance period ends? Just before the end date, your lender contacts you to go over your options for repayment. While forbearance means you don’t have to make payments during the period, interest still accrues, and you’re responsible for paying off the amount you put on hold.

When it comes to repaying the total that accumulated in forbearance, you have a few options. One is to repay the balance in full. Fortunately, you don’t have to pay it off all at once, though. 

You may also be able to negotiate a repayment plan, which involves paying your regular monthly mortgage payments plus a little extra until your mortgage is current again. 

You may also choose to defer the payments until the end of your mortgage term, which means you’ll be paying on your mortgage for a bit longer. Or, if you can’t afford your original monthly payments, you can talk to your lender about a loan modification. 

Learn more about how loan modification and other loan options work. Check out our comparison of a loan modification vs refinance.


sale-leaseback is a bit different than mortgage forbearance. Instead of deferring your payments for a set time, you sell your home to a leaseback company. The company pays off the remaining balance of your mortgage, and you receive the remainder of the sale price in cash. 

At first glance, this might seem like an undesirable option, especially if you don’t want to move. The beauty of a sale-leaseback is that you don’t have to. Instead of packing up and moving (which you can do), you have the option to enter into a lease agreement with the leaseback company. Instead of a mortgage payment, you pay an agreed-upon monthly lease, which is typically more affordable than what you used to pay for your home. 

Staying in the home you just sold is only one of the benefits of a sale-leaseback. The company that purchases your house takes on other financial obligations you were once responsible for, such as property taxes. You also get to tap into the equity in your home, which can help you to consolidate other debts and alleviate more of your financial burdens during a hardship. 

There are a few things to keep in mind when it comes to a sale-leaseback. For one, you do lose ownership of the home. You can no longer make changes or upgrades to the property without first consulting with the leaseback company. If the property increases in value, the company benefits from the appreciation. Additionally, you no longer get to take advantage of the tax breaks for homeowners, such as the mortgage loan tax deduction. 

Lease Your Home Back With the EasyKnock ReLease Program

While forbearance can make sense for some, it may not always be the ideal solution. You’ll eventually need to resume your monthly mortgage payments, and you still need to repay the amount you deferred during the forbearance period, including the accrued interest. Depending upon your specific situation, you may not be financially able to continue repaying the original payment amount each month. 

EasyKnock offers you a unique alternative solution with our ReLease program. ReLease is a flexible sale-leaseback program that allows you to sell your home, effectively eliminating your current mortgage. The thing is, you don’t have to leave the home you love. Instead, you get to remain as a renter for as long as you’d like. All you need to do is pay a set rent each month.

With the ReLease program, you don’t just eliminate your mortgage. You receive the difference between the sale price and the remaining balance of your mortgage. You can use the money in any way you need, enabling you to get rid of other debts and achieve your financial goals. The closing generally occurs faster than a typical home sale, converting the equity in your home to cash that much faster. 

Another benefit of the program is that you don’t have to worry about moving or dealing with moving expenses. You don’t have to shop for a new place to live, hire a moving truck, or deal with closing on a new mortgage. You get to stay right where you are the entire time. The only thing that really changes is that you pay rent each month instead of a mortgage. 

Key Takeaways

If mortgage forbearance doesn’t make financial sense for you, perhaps a sale and leaseback might. Before making a decision, look at your financial situation and your future goals, talk to a financial advisor, then consider all of your options. If you do land on a sale-leaseback, EasyKnock is here to help. Contact us today to learn more.

Tom Burchnell Director of Product Marketing for EasyKnock, licensed real estate agent.

This article is published for educational and informational purposes only. This content is based on research and/or other relevant articles and contains trusted sources, but does not express the concerns of EasyKnock. Our goal at EasyKnock is to provide readers with up-to-date and objective resources on real estate and mortgage-related topics. Our content is written by experienced contributors in the finance and real-estate space and all articles undergo an in-depth review process.