We wanted to present this recent Rent To Buy property that we sold to the lovely Lynnette. We thought this would be a really interesting case to talk about as it really does prove that elbow grease and TLC really can be turned into equity when it comes to renting to buy a property.
This was the view from the front!
Our buyer Lynnette is an agency nurse, moving to South Wales from the Midlands 20 years ago and renting around 6 different properties. Lynnette really wanted to buy, but 2 things would interfere with her buying in the traditional way. Firstly, her income was based on the number of hours she worked and was not a salary, due to the fact that she has recently changed employers and had a 2 month break on between, she had been advised by a mortgage broker to wait for at least another few months before trying again. Secondly, as Lynnette was 58, she had been advised that she could only get a shorter term mortgage due to her age.
Homes With Options were marketing this lovely cottage in a valley area, and met with Lynette. She loved the house and could see its potential, but realised that it need at the very least, sell redecoration from top to bottom!
This was the kitchen, it needed some serious TLC (or a new kitchen)
But he property also had lots of nice features, including this private stone walled garden to the rear of the property
This is what the figures looked like when Lynette bought:
Purchase price: £57,500
Monthly fee (rent only): £325
Term : Up to 5 years to buy
Lynnette was already saving around £250 per month in rent from her previous home, so decided to put this in a savings towards the purchase price, she had already paid the £3,500 downpayment which meant that she has a balance of £54,000 to pay when she opts to buy, which would be anytime in the next 5 years.
The other thing that Lynnette decided to do over time os to smarten up the house, refurbishing and redecorating while living there. A similar property that was of a nice standard sold recently in the same street for £75,000, so Lynnette know that just by smartening up the house, it could then be valued at around £75,000, giving her an instant equity uplift of £17,500.
The other thing to help the valuation will be time. The property market in this area has been very slowly recovering from the market crash, house prices are around the same as they were in 2007 and are very steadily rising. So depending on what the valuation would be in 5 years time, Lynnette feels that it will be more than £75,000.
Lynnette is planning to save as much as she can, to then put with a very short term mortgage, sometime in the next 5 years, which could look something like this:
Balance remaining to purchase: £54,000
Saved monthly: around £15,000
Deepening on getting the right legal and financial advice, Lynnette could be looking at a £39,000 mortgage to cover the rest.
With an estimated (depending on market conditions) valuation of £80,000, this would be less that 50% of its current market value, making it a really affordable option for Lynnette.
Lynnette is really enjoying making her new home her own, and has really used the rent to buy method of buying to suit her situation.
If you have any questions about this deal or any others you see on this site, please email us at firstname.lastname@example.org and we’d be happy to chat about it.
If you’d like to look for a Rent To Buy property in your area, please get in touch and we can add you to our list of tenant buyers.