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What is Rent to Buy?

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Rent to Buy is a UK wide scheme, designed for people wishing to live in their dream houses, which they intend to buy in a few years time.

Homes with Options specialise in this scheme, called Rent to Buy but also known as Rent to Own, Let to Own or Lease to Buy. The scheme is designed to ease the transition between renting and buying and allow  people to be able to afford to buy their own home quickly and hassle free.

There are many different ideas about the Rent to Buy scheme, but allow us to explain how the scheme with Homes With Options works and exactly what we can do for you.

Firstly, when you have found the right house that you want to Rent to Buy, you, as the buyer, have to put down a deposit on the property. This deposit will be significantly less than most require, and you can put down as much as you want. The difference is: with a small deposit, you will have to pay more monthly rent towards the property, whereas with a larger deposit, you can look forward to paying a smaller monthly rate.

Now, you may be wondering what happens with the rent you pay towards this property that you intend to buy in several years. Basically, the rent you pay to the homeowner usually covers the mortgage they pay on the property, but it also includes a deposit towards your future mortgage on the property. So, when you come to a time when you can take out this mortgage, you won’t have to borrow as much, meaning that your interest rates and mortgage bills would be reduced significantly.

Through our Rent to Buy scheme, you negotiate the terms in your individual contract with the homeowner, and Homes With Options helps you manage this process from start to finish. Each contract differs depending on the buyer and homeowner individually, and we try to create a scheme to help and cater to each of your situations and wishes. If you are struggling with the rent, or your circumstances change, Homes With Options will help.

 

Here is an example of a Rent to Buy deal through Homes With Options:

Mike and Leah recently bought their first home with us, as recent graduates they both had a salary but needed another 2-3 years to be eligible for a great rate on a mortgage. However, they did have £2000 in savings and another £2000 loaned from their parents to put towards their first home.

They set their heart on a 6 year old, 2 bedroom, 2 bathroom property with a garden and driveway for 2 cars, situated on a large privately owned estate in Bridgend, South Wales. (See the buyers story here.)

This is the deal that was structured to suit their situation:

Purchase price: £119,995

Getting started money (deposit): £4,000

Monthly rent: £450

Monthly ‘top-up’: £150

Mike and Leah will build up their deposit using their ‘top-up’ payments and have 5 years to purchase the house outright.

Deposit

Year 1: £1800

Year 2: £3600

Year 3: £5400

Year 4: £7200

Year 5: £9000

If they wait 5 years to buy their home, they will have built up a £13,000 (£9000 top-up payment + £4000 downpayment). So would only need an 89% mortgage.

If they exercised their in 2 years, they would have built up a mortgage deposit of £7600 (£3600 + £4000 downpayment). So they would have built up a 6% deposit for their mortgage in only 2 years.

 

We hope we have explained this scheme fully, and that Rent to Buy with Homes With Options is something that appeals to you.

Whatever your Rent to Buy needs, Homes With Options will help you. We will provide you with a scheme and contract to suit you, and we’ll manage the process from start to finish. Find out more information on our website, or through getting in contact with us directly!

Live in your dream home today! Contact Homes With Options here!

 

Figures are intended for illustration purposes only, Homes With Options do not give financial or mortgage advice.  You would need to get independent advice from a financial professional regulated by the Financial Conduct Authority to be confident that you will be eligible for a mortgage when any lease period comes to the end.
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