Not everyone can get financing of the magnitude necessary to buy a house in the short term or even in the medium term. The causes can be several, from the lack of sufficient savings to a bad credit history. Also, banks today are not lending money like they used to after the global financial shakeup and that is making the availability of money extremely limited in the market.
So what does a person do in these circumstances?
One option is to opt for a lease with option to buy. This is an agreement that is reached between the seller and the buyer in which the buyer agrees to buy the house in question at a later stage, either after a few months or a couple of years, depending on their capacity. As a buyer, you don’t have to make large immediate down payments and gain valuable time to make arrangements to accumulate funds for the purchase in the time committed.
It’s like blocking a property now to take full possession at a time that’s convenient for you.
Under this arrangement, you are only required to pay a margin payment that is about 3% of the value of the home along with an advance payment of one month’s rent. Then the agreement is signed and you will be forced to buy the house at the time you agree with the seller. The period in between is the lease period. The deposit or initial payment you have made is totally non-refundable.
In addition to the above payment, you must make monthly rent payments during the lease period and the amount will be clearly stated in the contract. A fixed portion of this payment will go toward the purchase amount of the house, so that when the lease ends, you will have to pay a much smaller amount for the purchase of the house. If you wish to extend the contract, you must obtain the express permission of the seller. Therefore, it is advisable to be fully aware of your financial capabilities and plan carefully to be clear about when you want to buy the house.
You should make good use of the time you have to organize funding, as it would not be appropriate to renege on your commitment. In addition, you must also make sure that you do not miss any of the monthly rent payments during this lease period. Any default can cause the seller to cancel the agreement and you will be the loser, since you would have lost all the payments you had made up to that point.
