01 Mar 2012
There are several good reasons to pay a deposit when you buy a home - among them the fact that you will have a smaller bond repayment to make each month and that you will save a mint in interest over the life of your home loan.
However, with property prices and interest rates at their current lows, many buyers who feel they can comfortably afford a monthly loan instalment really don’t want to wait until they have saved up a deposit before getting into the market.
So what should they do, especially when most banks are still very sticky about granting 100 percent bonds?
“Well, one answer is to rent a home now from an owner who is prepared to give you an option to buy it later at a pre-agreed price,” says Berry Everitt, MD of the Chas Everitt International property group.
This is not so unlikely as it sounds, he says, as many homeowners are only renting out their properties at the moment because they have not been able to sell.
“There are those who would be very happy to have the prospect of a sale at the end of a lease with rental income in the meantime from financially-sound tenants who also have an incentive to keep the property in good repair because it is going to become their own.
Everitt says the advantage of such an arrangement for the prospective buyer/ tenant is that the contract will usually provide for him to buy the property at a pre-agreed price at the end of the lease or sooner – therefore fixing the price while allowing sufficient time to save up a deposit.
In addition, he says landlords looking forward to a sale at the end of the lease period might charge a lower rental or perhaps even allow a portion of the monthly rent to be offset against the agreed purchase price.
This, he adds, would provide the tenant with a ‘readymade’ deposit at the end of the lease as long as he goes through with the purchase.
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