Rent-to-Buy and Mortgages are not the same. Home ownership is an important step in everyone’s lives. When it’s finally time to take that step, you may question which route is right for you: signing a rent-to-buy agreement or getting a mortgage and purchasing a home. As with any decision, there are pros and cons to each.
Rent-to-Buy
The rent-to-buy option describes a real estate property that is rented in exchange for a monthly payment, with the option to purchase the property during - or at the end of - the agreement.
In a rent-to-buy agreement, a portion of the monthly rent (20% with us) goes towards paying for the home, regardless of whether or not the renter chooses to own the property later down the line.
RTB lease options have a fixed price, usually based on the market value of the home at the time of the lease signing. This means that renters who sign an RTB agreement when the market is depressed can gain substantial value if they choose to buy the home in the future for less than what the value may be when home values rise.
If a renter decides not to purchase the house at the end of the rental phase, they will most likely not get a refund on payments made.
Mortgage
There are many benefits to owning a home. In fact, if you are in the financial position to do so, home ownership may be your best option. A mortgage payment gives you the ability to remain in residency.
In addition to that, a mortgage helps you to build equity. Purchasing a home gives you the ability to obtain a mortgage, which has the benefits of a tax deduction, etc. Owning a home helps to build equity by principal pay down and by home appreciation.
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