Is A Rent To Buy Scheme Beneficial For You?
If you would like to purchase a home but do not have enough of a down payment available to do so
, you may want to consider a rent to buy scheme. These types of purchase schemes are available through several private homeowners and the details vary. However, the basic premise of the concept is to pay rent in the home. If you then decide to purchase the home, the rent is used as part of the down payment. It is a great way to accumulate the down payment without having to come up with it all at once, something that may be difficult for some people.Types of agreements to purchase a home after renting
There are many different types of options available when dealing with a private purchase so you should make sure you understand the details before agreeing to it. However, there are two basic types of rental to own options that are most common. The first is a scheme where you have a set period of time to purchase the property and if you do so within that period of time all money you remitted for rent will be returned to you so you can use it as part of the down payment. The second type is where you have a graduated system of payment. If, for example, you purchase the home within six months all your rent is returned. However, for every additional six months you take to purchase, a percentage is deducted from the amount returned. This percentage grows over time.
Advantages of rent to purchase schemes
The ability to 'try before you buy' is particularly appealing to some people. This allows someone to get to know the area and live in the house to see if they really like it prior to committing to a complete purchase. The other advantage is strictly financial. Perhaps you have ample income to afford a home, but have not saved enough to make a sufficient down payment. The rent to own scheme allows you several months or even a couple years to accumulate the down payment needed to purchase the property. You can negotiate the time period with the seller so that you can eventually purchase the home and become a property owner.
Disadvantages of rent to purchase schemes
While there are mostly advantages to this type of rent to buy scheme there are some disadvantages. The primary disadvantage is that until you actually purchase the home you are simply a renter and subject to all the restrictions of a tenant. You cannot make significant changes or structural modifications to the home. The other potential disadvantage is the possibility that the market will decline and you are committed to a particular purchase price. In actuality the home may be worth less at the buying time than what you initially agreed to purchase it. However, the reverse is also possible and you may get the house for less than it is worth, actually saving you money.
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