We usually got stuck between these two – whether to buy a property is good or to take it on a rental basis is right. But what if you got the know you can have both. Yes ‘rent to buy’ or ‘rent to own’ is the new way for the young homeowner aspirants.
Apart from the traditional methods used as a mortgage to finance the new home in order to become a homeowner, rent-to-own is an all-new way and the perfect alternative to such traditional methods.
What is the rent-to-own method?
In this buyer pays a little more amount to the owner then the rent in order to get the homeownership in the future at on decided date. This process involves a contract between buyer and seller in which seller allows the buyer(renter) to lives in the property and pays more money than rent to become the future homeowner.
This method or way is opening the new doors of ownership for the young home buyers. As they don’t have big bank balances to buy a home. This process is making the way easier for the young home buyers.
Pay your ‘Option Money’ to get the home in future –
In the rent-to-buy process, buyer pays the non-refundable amount of money called option fee or option money so the buyer can have the option to buy the home in future. The option fee is 2% to 7.5% of the property price but it is negotiable by the buyer as there are no set criteria or defined rules.
On Contractual basis –
Rent-to-own property contracts are of various types, it’s up to buyer which one to choose. Basically, there are two – Lease Option and Lease Purchase.
Lease Option – In this contract, the buyer possesses the right to buy the property but not any obligation, when the lease expires. At the end of the lease also you can decide whether you want the home or not. If you aren’t interested in buying the property then you are not committed to buying the home. You can simply move out of it without paying rent to buy.
Lease Purchase – In this contract, the buyer is legally committed to buy the property at the end of the lease, whether the buyer can afford or not. Here the buyer is bound to buy the property.
It’s imperative to read and review the contract carefully. You can take help from the qualified real estate attorney or property valuer Sydney before making the deal. It’s important to understand the contract well before making any decision.
Know the actual purchase price –
As rent-to-own contracts depend upon the buyer and seller mutual understanding but it’s good to decide property purchase price in the agreement. Ideally, there are two ways – either decide the purchase price while signing the contract. The property price is set by the buyer and seller. Usually, the price decided is higher than the market value of the property.
Or else property price is determined when the contract expires and then the value of the property decided which is based on the property’s current market value. Most people want to decide the property value while signing the contract as the market conditions and trends changes frequently puts the great impact on the property value.
This is all about the new way to get the home ownership.