Rent to buy homes are a great way to purchase a home in case your financial position is not suitable for outright purchase or a mortgage. But before planning to go in for rent to buy homes you should know the nitty-gritty involved with the method. Rent to buy and rent to own are the two most frequently used expressions that refer to a lease option. The term “rent to own” is used mainly in the United States and “rent to buy” is mainly used in Australia.   
The principles of rent to buy homes are that the lessee or the tenant can exercise the option to possess the property at the end of the lease period. This process is also known as lease option. In straightforward terms, rent to buy homes mean the leaseholder occupies the property and pays the rent every month. This amount is slightly more than the typical rent and at the end of the lease period that tenant can use the option to buy the house.
Rent to buy homes are by and large for people with poor or with imperfect credit histories. This opportunity is not possible in mortgages as it is an elaborate procedure.
Those facing a shortage of cash but still wanting to be the owner of a home can opt for rent to buy homes. All they need to do is to shell out a very small deposit (sometimes as low as 0.2% of the property price) and the rest of the amount is divided and paid during the agreement period. Yet another benefit is that the lessee gets to occupy the property. But bear in mind that the property does not belong to the leaseholder until he/she pays up the full amount.
Usually the option money is placed somewhere between three and five per cent of the purchase price. There is a difference between up front deposit and option money. The deposit is usually non-refundable as well as the weekly option contribution. In simple terms, if you decide not to buy the property at the end of the lease tenure it will not be refunded.
Before entering into any such agreement ensure that you will be able to afford the mortgage payments when you conclude your agreement period otherwise all the investment you have made thus far goes wasted.
While it is a good idea that you’re monthly rents include a part of the option money you will have to be sure that you can come up with the money for the monthly instalments without fail otherwise you may lose your opportunity of home ownership.
Given that you could end up owning the house, take care of the property as if it was your own. It is your sense of duty to protect the house, make enhancements, so that its market value increases which in turn will make refinancing of the property all the much easier.
Finally, apply for loans well in advance. Remember that rent to buy homes are qualified for refinance loans. Ensure that your rent to buy provider uses a third party to handle your payments so as the whole agreement is seen as transparent to any bank looking to refinance you in the future.