Are you Making Double Mortgage Payments on an Unwanted Home?

There are many reasons why people find themselves with an additional, unwanted property. Maybe you have bought a new home but your first home is still not sold yet, or maybe the closing has fallen through when you thought you had a buyer? Maybe you have had a job transfer or relocation with work which has forced you to move to a new home or apartment before you were able to sell your old family home? Maybe you are getting married and wish to sell one property and keep the other? Maybe you have inherited a home with a mortgage still in place?

Making double mortgage payments can cause a lot of stress and see your hard earned cash go down the drain on a liability that you do not wish to have. Most people struggle enough just with one mortgage to repay each month, let alone two! Rent to Buy systems can take these burdens off your hands and relieve you of these unwanted pressures! The sale price that you are looking for can (and will) be achieved, with no real estate agent fees or commissions.

The Rent to Buy deals that suit these situations require the seller to be flexible with terms. By this we mean that in return for the Rent to Buy buyer paying the price that you are either hoping for or needing, the buyer will be looking for a delayed settlement of anywhere between 2 to 7 years (sometimes longer). The reason for this is because most Rent to Buy buyers, even though many earn very good monthly incomes, either have some credit issues marked on their credit report, or no, (or not enough) deposit saved to present themselves to the bank to obtain bank finance. Generally, a 2 to 7 year period allows these issues to be fixed and the buyer is then able to obtain a bank loan to complete (settle) the transaction.

What happens is that the price of the property is agreed upon between the two parties at the beginning of the deal, as is the period of the term (usually between 2 to 7 years). The price and all terms agreed upon are documented into the legal paperwork BEFORE signing. Each side obtains independent legal advice (this point is very critical). Contracts then exchange, once signed, but do not settle.

Very little deposit is required by the buyers when entering into a Rent to Buy type deal. As little as $10.00 can be put down to exchange the Contracts. The First Home Owners Grant can be used in a Rent to Buy house purchase to contribute to the deposit also. As many of the Rent to Buy buyers earn good income, they are generally able to take over the seller's mortgage repayments in full. This provides instant relief for the seller and his/her family, allowing them to freely move on with no expenses coming out of their pocket for the second home. The Rent to Buy buyer's also cover the rates and insurances, as well as general maintenance and improvements to the property. 

It is very important that the buyer's repayments are set up to go directly into the seller's mortgage account - NOT into a personal account of the seller. This way everyone knows that the repayments are being meet and no nasty surprises will appear later on in the transaction. The seller should organize with his/her lender for the Rent to Buy buyer to receive a copy of all statements in regards to the seller's mortgage account.

Depending on the type of Rent to Buy deal being implemented will depend on whether the repayments made by the Rent to Buy buyer come off the principle or not. It is very important that the seller locks in his/her interest rate for the term of the deal, this way the repayments are set for the period of the term. 

It is in the new Rent to Buy buyer's best interest to maintain and do some improvements to the property during the term of the deal. This is where Capital Growth and equity is built up, which is where the buyer's deposit will come from at the end of the term. Improvements that can be done to the property are such things as painting the inside and out, polishing the floorboards, doing up the gardens, etc. This is one of the main reasons why Rent to Buy systems are so great - time becomes the new buyer's friend, not enemy, as they are locked into a home purchase in today's market while waiting to correct whatever is holding them back from obtaining a bank loan.

The benefits of Rent to Buy systems for the seller who is trying to hold down two mortgages are huge. The seller receives the price that they need without losing money paying out real estate agent fees and commissions. The buyer covers all the outgoings for the property (mortgage repayments, rates, insurances, general maintenance, etc), relieving the seller of all draining overheads, including large mortgage repayments. The seller's cash flow improves instantly leaving him/her free to move on with life. The property is well cared for, as the buyer is in buying frame of mind, and knows the better they care for the property, the greater the reward of Capital Growth and equity at the end of the term.

Even though the seller does not clear his debt with his bank or lender straight away in a Rent to Buy sale, the seller's huge outgoings are managed and maintained by the buyer for the period of the term. At the end of the term, the buyer would finance over into the banking system and the seller's mortgage on the property would be paid out in full. The title of the property would then change over into the Rent to Buy buyer's name.

These systems are explained in full detail in our DIY Rent to Buy Houses Manual. The systems are written from the point of view of a buyer approaching, negotiating with and then buying a sellers home using Rent to Buy terms, with no middlemen involved (real estate agents or investors).