Lease Options Explained – How To Rent / Buy Can You Purchase Your Home

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There are many different words for this flexible method of buying on a lease option: lease purchasing, rent to buy or rent to own, tenant buying, and more. This means it can get slowly confusing, and often it does all the same.

Everyone has probably heard about buying on a lease option for many pricey items, including cars, televisions and games consoles. The option works simply through putting a deposit on the item, and arranging a time period over which to pay the rest of the cost back. Typically, for items such as these, the option is set up in monthly deposit payments, and can include added interest. These agreements are very common ways for more affordable, flexible buying.

So, how are lease options any different as an affordable way to purchase a house?

It has long been a popular and accepted method for lease purchasing when it comes to commercial properties. Although, recently, lease options have become more viable and common for ordinary buyers.

How Do Lease Options Work for Your Home?

Lease options on property works the same way as if you were to buy a car or sofa on an option. However, there are certain important differences to bear in mind.

Property lease purchase is a deposit on a house, just as you would with a mortgage deposit. However, this lease option deposit costs less than a mortgage deposit. You can also tailor this deposit to suit you – for example, if you put down 2% of the value of the property, you would have to pay larger monthly deposits (or pay over a longer term) than if you put down 5%.

Before you put the initial deposit, a lease term has to be between the buyer and the seller of the property. This is usually a term lasting between 2-5 years, and 3 years on average.

You also agree on how much you want to spend. At the end of the lease term.

For example, if your mortgage repayments were £ 300 per month, you would pay the amount, plus however, you agree to your final mortgage deposit. So, if you agree to put £ 100 a month toward your final deposit, then you will pay a total of £ 400 per month in the property, safe deposit box at the front desk.

Under this lease option, you would be paying all the bills for the property as well as taking care of any maintenance. The seller of the property would no longer need to deal with the property. This means the tenant buyer would basically own the property, prior to receiving the mortgage.

Taking Care of Everything

If you are looking for a lease option, for either buying or selling your home, it will be fully managed. This means it would be completely legal and protected, rather than just a flimsy deal. The lease option would be a safe, contracted agreement, which would be flexible and tailor-made to suit each buyer and seller's needs.

As with any lease option, there can be certain complications. However, these would have been handled and managed, so you would not have to worry about the deal. So, there would not be any back out of the deal unannounced.

If either the buyer buyer or seller were to be out of the deal, after that they had not been able to claim any money back. For example, if they were to pay their way home, they would not pay any claim. Equally, if the seller backed out, they would not be able to claim any of the buyer's money or contributions towards the property. (Even though the money is paid to the seller).

You would not be completely inconvenienced. So, a situation where someone backs out after signing and agreeing to the contract and term is highly unusual – this must be stressed.

The Rise of Rent to Buy

Thus, whether the agreement is termed as a rent to buy, rent to own, to rent or simply as a lease option or lease purchase.

More and more people are making the most of this relatively new, easy way to purchase their homes. It is particularly useful if you are a first-time buyer, as it can be a very effective way to get your first step onto the property ladder.

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Source by Yasmin Ffion Scott