subject: Rent To Buy Is For Everyone [print this page] A common problem facing many people looking to purchase a property is the sizeable amount of deposit that is often required. This is not only an issue for first time house buyers, but also people who already own a property and may want to move, but have little or no equity in their property. Fortunately, the rent to buy program offers everyone the chance to move into a new home without having to save for years on end to raise the funds for a large deposit.
Under this scheme, people looking to buy a property simply move into the house of their choice and pay a monthly figure equivalent to the market rent for a fixed period of time. The tenant then has an option to purchase the property at the termination of the rental contract at a pre-agreed price and, under the rent to buy program, the amounts paid in rent over the years are deducted from the final purchase price.
This has a number of significant benefits for those seeking to buy a property:-
* The amount paid during the tenancy may equate to as much as 25% of the property purchase price. This means that, should you choose to exercise your option to purchase, any deposit required will be minimal and you will require a much smaller mortgage.
* The value of the property should increase over the term of the lease so that, when you do choose to commit to the purchase, you already have instant equity in your home.
* As a long term tenant looking to make the property your permanent home, it is likely that you would look after it and make several improvements throughout your occupation. This would also help to increase the value of the property above the pre-agreed price.
* Banks will look more favourably on customers seeking finance on property below current market value, who have shown 3-5 years of making regular rental payments.
As you can see, it makes a great deal of financial and logistical sense for people with no immediate funds to take advantage of a rent to buy scheme. However, this program has advantages for people in all situations.
Imagine if you were selling your house and there was a considerable amount of equity in it. There is no need to use this equity to leap straight into another property purchase. It is feasible that you use some to pay the rent on a property in a rent to buy scheme, whilst taking the interest from the balance and having more money for equipping your new home, taking holidays and living life to a very high standard - all the time paying towards the final pre-agreed purchase price of your home. When it comes to making the decision about taking over the freehold of the property, you will have lived there already for a considerable amount of time, furnished and fitted it to a high standard and will enjoy the instant equity as demonstrated above.
Therefore, inasmuch as rent to buy schemes are the way forward for many people looking to buy their first home, it is a system which will also become more favourable amongst all property purchasers. The benefits for saving money and making money under a rent to buy scheme are for everyone.
by: Oliver Darraugh
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