Rent to buy is a fairly new concept in the UK, though it has been used in the United States for the past 20 years or so. The purpose of rent to buy is to allow people to enjoy the benefits of home ownership now and the opportunity to buy the property at a later stage when they are able to get a mortgage of their own.
The following audio clip features an interview with Angela Farrell of rentnow-ownlater.com in which she discusses the benefits of rent to buy as well as the ins and outs of the process.
Angela Farrell Discusses Rent to Buy
Rent to buy is a fast track way onto the property ladder for people who can make payments but who cannot get a mortgage at the moment. With rent to buy, people who can afford the monthly payments can rent a property while paying a small monthly premium. That premium then goes towards payment for the eventual ownership of the property.
The rent to own process is ideal for people who have had problems with their credit rating in the past. Restricted access to loans is a big problem in today’s market. The criteria for qualifying for a loan is much stricter as banks continue to tighten restrictions on borrowers. Though in the past people with bad credit could obtain loans to finance the purchase of a new home, this is not the case today. Many people end up in a cycle of renting because they cannot qualify for the loans they need. This is not a concern in the rent to buy system.
During the rent to buy period, you have a chance to build up your credit history; making payments on time every month will build your credit and show banks that you are able to make payments on a consistent basis. The rent to buy system allows you to improve your credit in order to qualify you for a mortgage in the future.
Nowadays, banks will ask you to put down a substantial initial percentage of the property price, typically around 10%. With rent to buy, you do not need to put down anything near that amount. Usually somebody who is renting to buy will put down between 3-5% of the property he is taking on. This extends the opportunity of home ownership to a much wider pool of people.
When it comes to the time period that might be set for someone to buy, there is a wide range of possibilities. The typical duration of a rent to buy transaction is between 1 to 10 years. Depending on individual circumstances, the duration of the rental period can fall anywhere within this time frame.
If your circumstances change during the contracted period of time, it is possible to execute the purchase earlier. The time frame is set up such that a purchase can be made anywhere within the rental period. The price of the property is fixed at the start, so it makes no difference whether you buy the property in the first year or in the fifth year of the rental contract. The benefit of a fixed price is that it is easier to budget for your purchase.
Any improvements that are made to the property during the rental period by anyone involved in the contract benefit all parties; the improvements will serve to increase the value of the property.
To prepare for a future rent2buy opportunity:
1) Find out your credit rating
2) Start saving money for a monthly payment
For more information, Angela Farrell refers you to her website at www.rentnow-ownlater.co.uk. There you will find information and details about how to prepare to eventually own the property of your dreams.
Visit www.rent2buy.com for property listings in your area and opportunities to start reaping the benefits of rent2buy.