Rent to Buy (which is also commonly called Rent to Own) is a way in which to own your home without needing to be eligible for a bank loan. Having trouble in qualifying for a bank loan? This comes as no surprise as The Reserve Bank of Australia (RBA) has for the 12th consecutive time since 2002 raised the official interest rate. This gives the major banks and lenders no choice but to pass the increase on to borrowers. Interest rates are now at their highest level since 1996 and with no relief in sight; many homeowners who overstretched themselves during the most recent property boom are now hurting and will continue to hurt. To make matters worse, the current Sub-Prime mortgage meltdown in the United States is further fuelling the crisis by making home loans extremely scarce to come by due to the lack of people willing to lend money. This is why many of the major banks including the Commonwealth, ANZ and National Australia bank have increased their lending rates outside the RBA’s official rises.
Rent to Buy is a way to own your home without needing to qualify for a bank loan. The whole concept is quite basic. You rent a home paying a little bit more than market rent which gives you the opportunity to purchase the property at a later date for a price that is agreed to at the time of rental commencement. When you pay that little bit extra in rent you are actually paying money towards your deposit. This enables you to have a sizeable deposit when you go to refinance with the bank at a later date which in turn makes refinancing easier. Rent is usually a fixed price of the agreement and is not subjected to interest rate rises. This usually makes many people who are in Rent to Buy houses carefree when the announcement of interest rate rises hits their television set of an evening.
The current Federal Labor Government has shown much attention in the benefits of Rent to Buy schemes. During a federal parliament sitting on the 31st May 2007 member for Oxley Mr. Bernie Ripoll envisage Rent to Buy as one of the methods in which the government would push enabling families to battle the current housing affordability crisis in Australia.
Rent to Buy is commonly found to way in which homebuyers can often escape the need for dealing with banks. This is extremely beneficial to people who are self employed or those with blemished credit ratings. Other benefits include:
- Minimum upfront deposit, sometimes as little as $7000
- No nasty interest rate rises- as soon as the contract is signed the terms are locked and the payments are fixed
- Rent to Buy agreements are not loans so there are no strikes against your credit record.
- No commitment to buy if you don’t want to. It’s just like taking your house for a test drive
- Flexibility to renovate and decorate as you please- it’s your house, why not?
Rent to Buy is a concept which can be suited to most people’s circumstances. Be like one of the many people before you and find out more by contacting us and let us show you how we can help you into your own Rent to Buy home.