What is Rent to Own and how can it help me.
The concept of Rent To Buy or Lease Options as it is sometimes known, is not new, and is used a lot in the UK Commercial Property Sector. It has been around for years in the USA and Australia and is becoming more popular in the UK as a result of problems in the credit markets and the housing crash.
Like the name implies you will be renting/leasing the home of your choice with an exclusive right to buy it at a future date. The future price of the property will be fixed at the time the lease-option is signed giving you total certainty.
There are two agreements used on this plan: the Lease (rental) agreement and the option agreement.
The Lease agreement is a regular rental (AST) agreement that gives you the possession of the home and is usually for a term of three to five years and outlines the monthly payments and other terms, just like a regular rental agreement form.
The second document is the Option agreement. This document gives you exclusive right to buy the home you are renting.
The great thing about Rent to Own is that you have a right to buy the home, but you are not obligated to. So, if your circumstances change you are free to walk away.
The Rent to Buy program gives you a number of benefits including:
- You can live in the home you want right now, even if you can't or don't want to buy it right away
- It allows you time to try the house before you commit fully to buying
- Gives you time to save for your deposit
- The price that you will but the house for is fixed from day one so you know exactly how much you will pay when you are ready to buy.
- Gives you time to repair a poor credit record if you have one.
- As you will be living in your home from day one and making payments it allows you to prove to conventional lender affordability, stability of residence and a good payment track record
- Your Option deposit and a portion of your rent will work towards reducing the agreed purchase price. This means that when you pay your rent you are investing in your future rather than paying ‘dead rent’
- No obligation to buy if circumstances change
Do I Qualify
In order to qualify for one of our Home Ownership Programmes you will need to meet the following basic requirements:
- A desire to OWN a home
- Some down payment money typically about 3-5% down of the purchase price
- A steady income from either a job or your own business.
- Sufficient income to be able to comfortably afford the monthly payments
- The desire and ability to pay bills on time (you must show an honest effort of paying bills on-time, we can get you into a house but only YOU can keep you there)
How much do I need to get started?
It depends on the property. Typically, we would ask for a deposit of between around 3% of the agreed purchase price. This is yours and will be taken off the agreed purchase price as a credit, should you choose to exercise your option to buy the property.
There is also a charge of £350.00, which is our application and processing fee plus a contribution to the legal costs of drawing up the Lease Option Agreement. You will also need to pay one months rent in advance
How quickly can I move in?
Pretty quickly. Once we confirm that you we wish to proceed, we will need to run a referencing and credit check as you would expect with a normal letting agreement. We will instruct our Solicitors to draw up the Lease Option agreement and then send the documents to you to be signed. Once we received that back with cleared funds, your ready to collect your keys!
This process usually takes around 28 days and is quite often quicker
Can I decorate or carry out improvement works to the property?
Absolutely! In fact, we encourage you to treat the home as your own. The only thing we ask is that you contact us for written permission before you carry out any major works. Remember, improvement works often add value to property, thereby increasing the amount of your investment. And, as you have the added security of knowing that your rent will not increase during the option period and the peace of mind of having a fixed purchase price.
As you are in the process of buying the property, you will be responsible for maintenance, repairs and damages that may occur.
Do You Do A Credit Check And What Happens If I Have A Bankruptcy Or Credit Problems?
Yes, a credit check is done in most cases. But things like bankruptcies, collections, being turned down for a bank loan or other credit problems are no concern to us in regard to getting you in one of our homes. We want to be familiar with your credit issues so we can better guide you to repairing your credit.
If the credit is extremely bad, you can still get approved but we won’t be able to be flexible on your down payment, or in some cases we may require you to pay a slightly larger down payment.
What happens if for some reason I still don't qualify for financing?
When anyone, whether they could qualify or not comes to the end of a term, they have several options. First, they can walk away from the property. This is not recommended at all, since you would lose the money invested, but certainly it is an option.
Secondly, they can extend it for another year until they have a sufficient credit history to complete the purchase. Extending for a second year wouldn't hurt, because at the end of the second year you would have even more equity accumulated. By extending it, the price and terms may be slightly adjusted according to the market, but all of your accumulated equity will be preserved.
On some properties we can structure seller financing, so you'll never need to go for a bank loan.
What properties are currently available?
We have a wide range of homes from apartments to semi-detached houses becoming available. Register to view existing properties and keep up to date with new properties as they become available.
Owning you new home is as easy as
1-2-3:
- Fill out our online application completely (CLICK HERE) to get qualified for our program
- View the pre-approved properties that we send you to and choose your new home
- Pay your down payment, sign your paperwork and move into your new home
You are under no obligation whatsoever when you start this process and we promise that your details will be kept confidential.
Earn a fast, easy £500
For telling your friends about us
We’ll give you £500 cash for every property we buy from someone referred to us by you. And because you can refer as many people as you want, there’s no limit to how many times we’ll pay you up to £500 CASH
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