The hire purchase
If you are dreaming of owning your own home, but you do not have the finance required at the moment, then you can have one Rent to Buy to be interesting.
The principle of renting a property
In this variant of financing, a lease agreement is concluded which allows the property to pass over to the tenant's property over time. In doing so, the final purchase sum of the property is already determined when the tenancy agreement is concluded.
This also allows tenants with less Equity to the desired home. There are 2 types of hire purchase, the classic variant and option purchase.
The classic rental purchase
This variant of real estate financing is binding on both parties and requires the purchase of the apartment or the house. In the relevant contract, the landlord and the tenant specify in advance the conditions under which the rented property is rented to the tenant's property. It is customary that 20 percent of the purchase price must be applied in advance in the case of the classic rental purchase. This deposit corresponds to the actual equity which must be raised in the case of real estate purchase and is due before the creation of the notarial deed.
The purchase sum and the interest arising are deferred during the hire purchase, ie a fixed payment period is granted. The tenant pays his debts in the form of a monthly rent. Depending on the agreement and the amount of the rent, the total costs can either be paid by the monthly rent alone or by additional payments. The residual debt can be borne by a loan, for example. In case of full payment over the monthly rent, the duration of the hire purchase will be longer, but no additional and initially unpredictable payment obligations are to be expected.
The option purchase
This variant of option buying is often offered by cooperatives and grants only the option to buy the property when the lease is concluded. The lease does not automatically oblige the tenant to purchase the apartment or the house in which he lives. However, he gets the right of pre-emption to his home. The period in which he has to make a purchase is normally about 25 years. After the expiry of the term, the property must then be purchased at the price determined at the end of the rental agreement. Future rising or falling real estate values may therefore not be taken into account.
The advantages and disadvantages of hire purchase
Like everything else in life, renting has certain advantages and disadvantages, which should be thoroughly considered before the conclusion and should be weighed against each other.
A very clear advantage is that the purchase of the home can also be achieved by means of hire purchase with little or no equity. no credit needs to be borne. A debt can not be achieved in this way. The monthly rent payment is partly included in the repayment of the hire purchase. The purchase price is fixed and therefore fixed throughout the entire term. The long runtime also allows you to save the residual sum so that no additional loan needs to be taken.
One of the serious drawbacks is that the final purchase sum is usually much higher when purchasing a lease than with traditional financing. In addition there are closing and mediation fees, which add to the book.
Even if the federal government promotes the acquisition of a home with different programs, this does not include the hire purchase. All costs must therefore be applied by the buyer himself.