Buying a Home Under Rent To Buy Terms

The benefits to a renter, come home buyer, of buying a home under Rent to Buy terms are many. Rent to Buy terms offer people the opportunity to enter home ownership through a live in lay-by system, without needing a deposit, good credit or bank finance!

Rent to Buy systems gives you control over your circumstances, preventing them from ruling whether you can or cannot purchase a home. No, or very little deposit is needed when using Rent to Buy terms, you do not need to qualify for bank finance to enter into your own home purchase. You may have credit issues marked on your credit report, or you may even be bankrupt. Using Rent to Buy terms to buy your own home allows time to become your friend, not enemy, working for you on your behalf to fix up whatever is preventing you from obtaining a bank loan while you are already set up in a home purchase!

There are different deal types available when buying a home under Rent to Buy terms. Not every Rent to Buy deal will suit every buyer or seller, but at least one will. Answers for buyers and sellers can be found using these systems. Finally, there is a way for people who are stuck in the rental trap to exit renting and move over into home ownership.

There are 5 different deal types that fall under Rent to Buy terms. They are:

1. A Lease with the Option to Purchase
2. An Instalment Terms Contract (otherwise known as Wrap)
3. The Seller Funding the Buyer's Deposit (otherwise known as a second mortgage carryback or vendor finance)
4. A License to Occupy
5. Tenants in Common

Every one of these Rent to Buy deals offers flexible terms that traditional real estate does not offer. Rent to Buy terms opens up the real estate market place so that all Australians (not just those who can obtain bank finance) can have the opportunity of home ownership. Each of these Rent to Buy deals have been practiced successfully many times before in Australia - in fact there are many Australians who right this very moment have exited the rental rat race and are using these Rent to Buy systems to purchase their very own home. There is nothing quite like knowing that the monthly repayments that you pay out each month are being invested into your own future - not that of your landlords! 

Rent to Buy terms require the seller to be flexible with terms. By this we mean, in return for the buyer being happy to pay the price that the seller is either needing or hoping for, (upon the buyer doing their homework in the local area on comparable sales that have already gone through on homes similar in size and quality), the buyer would be looking for a delayed settlement.

In a traditional house sale, settlement occurs between 4 to 6 weeks after contracts have exchanged, once the buyer's finance is in place with their lender. In some Rent to Buy deal types, settlement is delayed, anywhere between 2 to 7 years (sometimes even longer - maybe 30 years, but very rarely). The reason the buyer is needing a delayed settlement is to allow time to pass to fix up whatever it is that is preventing the buyer from obtaining a bank loan.

In some Rent to Buy deal types, the seller is actually providing the buyer with finance until settlement by using his/her loan that is already in place with the seller's bank or lender.

Another great benefit to the buyer of Rent to Buy terms is that the price of the property is locked in at the beginning of the deal when contracts exchange. This means that even though the buyer is waiting to fix up any problems during the term to present themselves to the bank to obtain bank finance at the end of the term, (when settlement takes place), the price of the property is not rising, it has been locked in and documented into the contract and cannot be changed.

Any equity that accumulates in the property during the term becomes the buyers reward. If the buyer had no deposit saved at the beginning of the term, this is where the deposit is sourced from at the end of the term (settlement) when presenting to the bank or lender for finance.

Rent to Buy terms are just creative ways of providing people with home ownership opportunities that traditional real estate and the banking system does not and cannot provide! Do not mistake the use of the word "Creative" here. We have often heard the term "Creative" used deceptively - what we are communicating here on this page is simply a point of difference compared to "traditional" ways of buying and selling a home.

Our DIY Rent to Buy manual offers detailed explanations of all of these Rent to Buy deal types, plus a step by step guide on how to implement these deals so buyers can find, set up and enter into their own home purchase without qualifying for bank finance, and without needing real estate agents or investors.