In Australia the alternative home buying method called ‘Rent to buy your house’ is becoming more common.  The reason behind this trend is the high bank interest rates and the strict mortgage terms the banks impose on aspiring home buyers. Low income groups, self employed and those who cannot show proof of a steady income or who have just become Australian citizens. Some others do not have enough savings or a good credit history to be eligible for a home mortgage from the banks and financial institutions. Many reasons such as a divorce or frequent change of jobs also make it hard for some people to access home finance in the traditional way.  Non-banking lenders have devised a plan in such a way that these people can enjoy the benefit of home ownership, by making deferred payments over a period of usually around three years.

As the rent to buy your house program does not involve a bank the transaction is only between the seller and you the buyer of the house. An agreement is signed by the landlord and the buyer to use the lease option.  There is a low down payment and an additional fee for exercising the lease option called the option fee. The buyer or lessee occupies the house and pays the rent agreed upon. You also have to pay an additional sum towards the purchase price of the property to the landlord. The additional payment called rent premium accrues towards the buying price of the house.  The buyer has the right to buy this house at an agreed date in the future at a price agreed upon by both at the time of signing the agreement. The seller has the obligation to sell the house only to the buyer as long as the agreement is in force.  But the buyer can change his/her mind and decide not to buy.  In that case, the buyer will lose the option fee and the additional rent he paid towards owning the house.  

The rent to buy your house scheme is beneficial to both the buyer and seller of the house since the buyer enjoys the house ownership even while he is paying only rent.  The taxes and other charges utilities will be paid by the owner. The houses are owned by real estate investors who also generate a steady cash flow using the house under the rent to buy your house scheme. You can repair your credit situation and also save the required down payment for obtaining a mortgage while he is occupying the house that will become your own at a mutually agreed date. You can also do improvements and modifications to the house.  At the end of the agreement period your own the house and stop paying rent. You must understand clearly the terms of the agreement and also ensure everything contained in the agreement is actually present in the house. It is advisable to take the help of a legal and financial advisor to make sure that your interests are protected. You should exercise a high degree of caution when choosing the rent to buy your house option.