‘Rent, then own your home’ is a system in which low income groups and people with limited savings can realise their dream of owing their home.  Owning a home is a dream of most people and prolonged payment of rent is considered as a dead investment.  Conventional lenders like banks and traditional financial institutions have stringent terms for home mortgages. This is due to the high home prices and the high rates of interest on the mortgages.  Due to these reasons most of the people who do not have enough money saved look for other alternatives to own homes.  Non-traditional lenders have found a way to finance the home ownership of these people with flexible terms.  Rent then buy your home programs help those with limited or no money for down payment, no regular jobs or those who are new citizens of Australia.

The banking lenders have many homes owned by property investors. You can choose the house that suits your requirements and rent it under a different agreement that entitles you ownership of the same property that you have rented at a predetermined date.  The purchase price of the house is also fixed and remains the same till the date of expiry of your agreement.  During the agreement period you have to pay the agreed rent and an additional rent premium which will accrue towards the cost of buying the house later. You must also pay a fee for this buying option known as the option fee.  The option fee is non refundable.  You have the right to purchase the property at the agreed date on the agreed date under the agreement for rent then buy your home program.  But you have no obligation to buy the house and can decide not to buy the house in which case you forfeit the option fee and the rent premium paid towards purchase price of the house you have rented.  The landlord must sell the house only to you till the expiry of the agreement period.  

The advantages of the rent then buy your home are many. You can rent the house you wish to buy at a later date with a price fixed now.  This allows you to save the huge deposit amount you would otherwise pay for a traditional mortgage.  You also enjoy the flexible terms such as low deposit and monthly payment towards the purchase of the property.  You can pay the rent alone and save money for using to buy the house at a later date.  In the meanwhile you can manage your finances and build a good credit so that you can soon get a good mortgage with a reasonable rate of interest. You must take care that the terms of the rent then own your home agreement is clearly understood by the owner of the house and you.  Inspect the property and check if everything mentioned in the contract is actually there in the property. You must be clear about your rights and responsibilities in this arrangement. Take the help of a solicitor to make sure that your interests are protected relating to renting as well as buying the property.