Did you know that the household growth rate can be 4%-6% behind the population growth rate each decade? If you’re trying to get on the property ladder, you may be looking at your options, and one method is to buy a rent-to-own home.
But what is a rent-to-own home and is it the right choice for you? Buying a house is a massive decision, and it’s vital to consider the pros and cons of different property buying methods. You should have as much information as possible before you make a commitment, and we’re going to look at some of the benefits and downsides of rent-to-own agreements.
Keep reading to learn more.
What Is a Rent-to-Own Home?
A rent-to-own home is an agreement whereby you make higher-than-market-value rent payments for a specified time period. This additional money is your downpayment which is used to buy the house at the end of the agreed time.
Advantages of Rent-to-Own Homes
There are numerous upsides to signing a rent-to-own home agreement. This can include potentially being eligible for this kind of contract if you have a poor credit rating or even no credit rating. If this applies to you, it can help to learn more while you weigh up your options.
You can also live in the property for the duration of the rental period, giving you time to decide if you would eventually like to purchase the home. If not, you don’t have to buy the house at the end of the agreement.
Another advantage is that many rent-to-own contracts split property repair costs between the landlord and the tenant. This means if an expensive repair is needed at any point during the agreement, you might not have to foot the bill. However, it’s crucial to check what the contract stipulates so you fully understand what costs you are liable for if repairs are required.
Disadvantages of Rent-to-Own Homes
There are some potential downsides to having a rent-to-own home. For example, if you decide not to buy the property, you will lose the additional money you paid on top of the standard rent payments.
You also need to make sure you’ll be in a position to purchase the property when the time comes. If not, the owner could sell the house and you’d have to find somewhere else to live.
Consider Buying a Rent-to-Own Home
You no longer need to ask, ‘what is a rent-to-own home’, and you can consider the pros and cons before deciding if this would be a good option for you. You can enjoy trying a home out while gathering a deposit, and your landlord may share the costs of any property repairs. These benefits could outweigh any potential negatives and help you purchase a beautiful home.
If you’ve enjoyed reading this rent-to-own home article, check out more of our blog posts before you go.