It won’t be long before the whole of the UK gets on board with using “Rent to Buy” as a prime way to buy property, because of the massive benefits for the incoming home owner. Based on my own experience of working with home buyers, here’s a list of the Top 10 Benefits… not in any particular order, so you can decide for yourself.
You only need 3-5% “get started” money.
I have lost count of the number of first-time home buyers who tell me they feel like they’re moving further away from their dream, because of the deposit demands of the high street banks. True to say, you’ll need anything up to a 25% deposit to get the best mortgage rates right now, and saving THAT much money in a recession is a really tough ask. A typical Rent to Buy scheme only asks the tenant-buyer for a far more affordable 3-5% of the home’s value to get started, giving a significant advantage over traditional loan terms, and offering a much more achievable target for getting on the property ladder.
You don’t need a mortgage today.
That’s right… a typical Rent to Buy scenario lets you move into the home straight away, without all the delays and hassles of getting a mortgage from the outset. This is normally because the home has been purchased with private funding, or sometimes leaving the asset of the previous owner’s debt in place for the period of the option term. This time lag allows the incoming tenant-buyer the luxury of applying for finance at a time most suitable for them (for example; when a great mortgage product is being promoted, or when their savings are at an optimum level).
You can build up a payment history as you go along.
There is a little understood barrier, particularly amongst first-time home buyers, around the issue of their credit rating. To have the BEST credit score (and therefore be an appealingly low risk for the banks ND gets their best loan interest rates) you actually need to have a history of borrowing and successfully paying back money. By taking a Rent to Buy option, a track record of paying monthly outgoings such as utility bills, council tax, rent and option fees builds up, increasing the chances of a successful finance application when the right time arrives.
You can start buying while your credit rating repairs itself. So… you’ve been a bit unlucky in the past, and maybe missed a couple of regular payments that has spoiled your credit rating for a while. Should that mean that you’re denied the opportunity of home ownership? With a Rent to Own property the answer is firmly NO. Of course, you would expect to discuss these matters with any potential landlord or seller, but if you can satisfy some basic criteria and demonstrate steady employment, earnings potential, and a commitment to clear the slate of those old misdoings, there is no reason why you can’t be a home owner and start the buying process straight away.