When we think about the options that we have to start living on our own we always think about buying or renting, however there is a third way that is recently becoming very popular: Renting with purchase option. We explain you how it works.
In the recent years, with the general economical situation, it is very difficult to get a mortgage from the bank entities, for this reasons and other aspects there are more and more people that decide to live in a rented house. However, there have been an increase of the number of people that choose to agree with the owners of the properties a rent with purchase option
How does the rent with purchase option work?
It is a commitment between the owner of the property and the one who is interested. On it they agree a purchase price and a period of time in which the client will pay the rent bills monthly while he is living in the dwelling and is waiting for the bank to give them the mortgage, to inherit, get money from a sale etc.
when the agreed period ends (it use to be between 3 and 5 years) the amount of money that has been paid monthly (or a percentage of it) will be deducted from the sale price.
In the contract, it is usual to agree on an initial payment as a guarantee to make the owner be sure about the real interest in the purchase of the property, and it is normally deducted of the final purchase price. If the sale is not done finally, the owner keeps that money as a compensation.
This system is very variable, it will depend on the type of agreement that reach both parts and it is reflected in the initial contract.
Esta entrada también está disponible en: Spanish
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