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The United States is now in the middle of a devastating mortgage crisis, and the United Kingdom's mortgage market is nearly as bad. Millions of home owners have been financially crippled by the combination of sputtering economies and rising interest rates on flexible rate mortgages.

Higher interest rates have created a sudden increase for those with flexible rate. When a budget is already tight, this can make it very difficult to maintain payments and stop repossession. Lenders are also pressured because of the high number of defaults and the cost of carrying loans that are delinquent.

Here's a new strategy to stave off home repossessions. Its called "rent back house" and is an interesting ploy. The concept of "rent back house" means exactly what it seems; the person who holds the mortgage (and is defaulting on it) gets to stay in their home by becoming an tenant instead of an owner. Folks in this situation may even be able to sell and buy back their houses. Other choices include renting to own and similar ploys.

The company who buys the home in a "rent back house" scheme will usually offer to charge a rent that is much less than the current mortgage payment which eases the crises for the homeowner. The seller need not move out of the house, which is of course yet another expense, and has a lease that fixes a housing cost for a period of time instead of the worry of what the next mortgage interest rate increase might be.

A fixed-rate mortgage creates a much more dependable housing situation than renting. For instance, when you're renting and the term of your lease expires, the only way you may get to stay is by signing a new contract with much heftier rent payments. Also, in a rental situation, you always have that outside chance your landlord could decide to sell the property landing you out on the street. Admittedly, this doesn't happen often, because your landlord wants to keep you as a tenant, but it is a thought you have to live with. The bottom line is that there are insecurities as long as you don't own the property where you live.

A buy back option, that ensures that the house cannot be sold from under you for at least two years, will eliminate this uncertainty. Some companies will allow you to exercise your option at the house's current market price or less if you buy it back during that period. If at all possible, you need to make an effort to have a buy back option included in your contract.

Be aware that quick sale buyers and rent back providers will generally pay a price that is substantially below the actual market price, but you will buy back at the full price. Still, once past the current financial crunch, these schemes may allow homeowners turned renters or tenants to buy again. It goes without saying that flexible rates would present the same risks again. In fact, if property prices go up in the next few years then buying back the house at today's price (or even lower) is an attractive option.

But how did this all happen? Back when home loan interest rates were very low, many flexible rate mortgage programs were offered using special low "starter" rates. These programs enticed many buyers to accept loans where their budgets really only were appropriate to meet payments at the starter interest rate. Then when rates rose sharply recently, the new adjusted payments were impossible for them to meet. Many choose to either do a "quick sale" or a rent back house plan in order to avoid losing their homes. For some, renting back is a lifesaver, allowing them to rent back and then buy back their same house without having to move out and give up their dream home.