A new buy and lease-back service has been launched in Ireland, which could enable mortgage holders struggling with arrears to clear their debts and stay in their home.

In return for signing over the title of the property to Arizun Stay in Your Home, the company says it will give the distressed mortgage holder a guaranteed long-term lease, which can be extended every six years.

The rent the then tenant pays is based on the value of the home and is described by the company as "reasonable" and "market based".

The homeowner also has the option within the first six years of the tenancy of buying their home back from the company and they can use up to 40% from the capital appreciation of the property for their mortgage deposit.

In order for the system to work, however, the bank holding the mortgage will in each case have to be willing to sell the loan to Arizun at a discount.

The company says it has €100 million in funding to start with from LCM Partners in the UK and it is expected that more funding will follow.

It is also understood that it has spoken to a number of banks about loan purchases and has received a very favourable response.

The service is being suggested as a possible option for some of the 28,000 people who the Central Bank says have mortgages that are more than two years in arrears.

Arizun claims most homeowners whose loans are in arrears do not qualify for the Government's Mortgage-to-Rent scheme as their income is not below the required threshold of €42,000.

As well as there being no ceiling on income, there is also no means-testing of assets or upper limit on the value of the property, according to the firm.

Arizun was founded by US businessman John McDaniel who, according to the company, is supported by a team of experienced financial service and property professionals.