The dream of owning a home one day has increasingly become an unachievable target. It is mainly because of the fluctuating and ever-increasing prices, and many people are turning away from this generational goal and opting to rent homes. Rentals are a loop leading to financial losses because you’ll be too busy paying monthly to save to buy a house one day. But the question remains, for how long will this be a feasible option? People look to settle down before they retire but this cycle makes it nearly impossible to build or buy a house.
A scheme has been introduced, known as rent to own homes or rent to buy. It proposes a solution to this housing issue by allowing the prospective tenants to rent a property they want to buy eventually, by leasing it to them. The option fee and monthly payments will be relocated to the purchase price and the closing costs in the end. It is very beneficial for people belonging to different classes.
Types of Contracts for Rent to Own Homes Scheme
There are two types of agreements for this initiative. These legalities can cause significant issues that can be prevented if an informed decision is made. The contracts are:
This agreement states that after the expiry of the lease, the tenants have no obligation to go forward with the purchase of the house. If they did not like their experience or if they had a change of mind, they can withdraw from buying without any legal repercussions. No strings attached with the property allow you to live freely. It gives you the right to buy the property before the lease expires.
This contract legally bounds you to purchase the property after the end of the lease. You cannot find a legal way to escape the purchase. If you have some definite financial security to continue with buying the property at the end, only then would we recommend this contract.
Pros and Cons of Rent to Own Properties
On one hand, rent to own homes have a higher rent which makes people hesitant at first. On the other hand, when buying a house under this scheme, you will be able to save yourself money because all the payments will be allocated to the purchase cost. In the long run, the fronting costs will help you pay for the house quickly but they might be issues for you temporarily.
Legal Protection from Land Price Fluctuations
When you sign the contract, the price of the house is marked. Any change in the property value in the forthcoming years has no impact on your agreement. This protects the buyers from updated prices. The disadvantage of this scheme is that most prices are kept slightly higher to make up for changes later down the road. If the value of your property goes down, you can always choose to forgo buying the property at the end.
Availability of Options
Rent to own properties can be obtained under lease-option so that the final decision is yours. The downside to this can be an uninformed decision in choosing the leasing option. That can put you in a bit of a pickle because then you’ll legally be bound to buy the house. To help you through this progress, you’ll need to hire a qualified team of experts. One such company that you can c|nsult for rent to own homes is Stop Renting Perth.
Frequently Asked Questions
- Are rent to own homes good for building and maintaining credit?
Yes, if you go about it strategically, you can build and maintain a credit system. Initially you have to pay an option fee which can be allocated to closing costs towards the end of your deal. If you decide against buying the house as per the terms of your lease-option, you can sell the option fee to someone else to continue the process instead of you. It saves money for you all the while maintaining your credit.
- Should I buy a house or rent a house?
You should invest in a house because conventional rentals end up blowing over your funds and finances. If you can’t afford to buy a house at once, you should definitely go for rent to own one. It will help you in the long term because the money you pay monthly will be allocated to your home when the lease ends.
- How do you buy a rent to own house?
Searching on Google for rent to own houses near you will only take you so far. You should contact an agency which specializes in such transitions. One such business is Stop Renting Perth. These companies provide assistance through the complete process of renting to own properties.