Discover Home Ownership Today Through Lease With Option To Purchase

A four-bedroom home with two bathrooms and a big backyard. A two-storey house on a quiet street that is in close proximity to schools and parks. A two-bedroom, two-bathroom bungalow that is near the beach. What type of property do you fancy owning?

The answer would naturally depend on your lifestyle needs, the size of your family, and your preference in terms of location. However, these are not the only factors to consider when you buy property. Other elements come into play such as the quality of the neighbourhood and the possibility that your life may change (i.e., you get engaged or you get pregnant). Paying for a temporary house or apartment might not be so economical and purchasing a property right now might not be possible with your current finances. You are not restricted to just these two options because you can work your way towards home ownership by entering a lease with option to purchase agreement.

The terms and conditions in each lease option scheme will vary according to the agreement made between you, the buyer, and the seller. The prevailing appeal of the lease option is that you can buy a house even with a spotty credit history. Moreover, you don’t have to apply for a bank loan to pay for the mortgage and stress over the stringent qualifying criteria to get an approval.

An ideal agreement would be one wherein the seller will only require you to pay an affordable deposit and the monthly payments you make can then be considered as installments for paying the sale price of the house. The upfront deposit you pay would then be deducted to the sale price of the house. So the higher the deposit, the smaller monthly payments you have to make. This may be more accurately referred to as a lease purchase rather than a lease option.

With some lease options, you pay for the rental rate and have the right or option to buy the house or apartment after a certain term, for, of course, an agreed upon price. This means that you have no obligation to buy the property but you do have the exclusive right to complete the purchase. This sort of agreement might come with an option fee, as a way to compensate the seller for putting the property off the market and declining potential buyers.

Your rental payment, in this instance, may be a bit higher than what it would usually go for in a normal situation. But a portion of that rent may go towards paying for or be credited to your down payment, should you eventually decide to buy the property. A condition for this type of lease option might be that the portion of the payments that went to the down payment for the house be forfeited if you decide to not buy for whatever reason — maybe the neighbourhood ended up not being agreeable, or maybe your circumstances have changed.

Essentially, the lease option makes home ownership a lot easier, giving a chance to many people who would not otherwise have the opportunity to make this significant investment.





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