Buying a Home With No Deposit

Do you have no deposit saved, or so little that it is not enough to qualify for bank finance?

Do you know that you can still purchase your own home without needing a deposit? Using Rent to Buy systems to purchase your own home means that you do not need a deposit, nor an investor, nor a real estate agent, nor a bank! All you need is a seller who is willing to be flexible with terms with you. In exchange for these flexible terms, the Rent to Buy buyer will be happy to pay the price that the seller is needing/hoping to get for the property (upon the buyer doing homework in the local area and obtaining comparable sales of other similar properties already sold recently in the area).

What if we could show you how to find a seller who has some equity in their property that they are wishing to sell, and who would be happy to leave that equity behind in the deal for a period of time (usually between 2 to 7 years) for you to use as your deposit? This type of Rent to Buy deal is called the Seller Funding the Buyer's Deposit. We have helped many buyers into their own home using this type of Rent to Buy deal.

In this type of Rent to Buy deal, the new Rent to Buy buyer needs to have good credit and enough income to cover their own bank loan for whatever is not being covered by the seller. The seller may have enough equity to leave behind say 30% of the sale price. The Rent to Buy buyer takes out a mortgage on the property and the title of the property changes over into the new buyers name within 4 to 6 weeks, at settlement. The new buyer alongside their bank loan for the 70%, also has what's called a second mortgage obligation (meaning he/she is obligated to pay the seller at a later time) with the seller for the 30% left behind.

The seller takes out a caveat over the property to protect their money that is being left behind in the deal to cover the buyer's deposit. This money is usually left behind in the deal for a period of between 2 to 7 years, to allow time for capital growth to acquire in the property, so the new buyers can refinance out the seller's equity at the end of the term. The length of the term does vary with every deal as the length of the term is dependent upon the buyer and the sellers circumstances.

In regards to interest being paid on this money, it really depends on the market at the time. If it was a buyer's market, no interest would be paid, as the buyer would have paid the price the seller was either needing or hoping for in return for flexible terms of sale, whereas other "traditional" buyers would have just gone down the road and purchased a similar property for a cheaper price.

If the market was a seller's market (where there are not enough properties on the market for the amount of buyers so sellers are easily achieving their asking price, if not more), the buyer would pay the seller interest on the money left behind for their deposit to compensate the seller for being flexible with terms. The interest rate agreed upon and how often interest payments would be made would be up to the seller and buyer to decide between themselves.

At the end of the agreed term (usually 2 to 7 years down the track) the buyer would refinance out the capital growth accumulated in the property and pay the seller's borrowed equity back in full.

What if you have no deposit saved and also have spotty or bad credit, so cannot get a loan at all at the moment? There is another Rent to Buy type deal that you can implement to enter into your own home purchase. This deal type is called a Lease with the Option to Purchase. Buyers can enter into a Lease with the Option to Purchase deal type with as little as $10.00 deposit.

Basically, with this Rent to Buy deal, a Residential Lease Agreement and a Call Option deed are entered into by both parties. An Exercise of Option to Purchase, Nomination of Assignees and A Contract for Sale all are attachments to the Call Option deed. The price of the property is agreed upon at the beginning of the deal and documented into the Call Option. The Rent to Buy buyer's usually take over the full mortgage repayments of the seller, plus cover all maintenance and insurances of the property. The tenant/buyers look after the property as if it were their own. This is in the new buyer's best interest as at the end of the term the new buyer's will want to be using all capital growth accumulated in the property to use as their deposit to obtain a bank loan.

In these above Rent to Buy deal types, time becomes the buyers friend, not enemy, as they are able to save their deposit while they are already set up in their own home purchase, rather than waiting and trying to save their deposit while they are spending a large portion of their income on dead rent money. In these deal types, the new Rent to Buy buyer is investing this money into something of his/her own while saving up their deposit! So much better to invest in your own future rather than that of your landlords.

Our DIY Rent to Buy manual explains and shows you how to implement all of the above Rent to Buy deal types to enable you to find a home of your own. Finally, there is an alternative for people to purchase their own home who do not meet the banking criteria!