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Rent to own

Rent to own

RENT TO BUY

Rent to buy schemes are particularly popular in the States of New South Wales and Victoria.

In general terms, the scheme is useful for those who cannot afford to buy an asset [e.g. house] outright. Initial ‘rental’ payments are made, with an amount allocated to the deposit, with a balance to be paid at an agreed time in the future.

For example, suppose the market value of rent in a location is $400 per week. Under a rent to buy scheme, the ‘buyer’ will pay $600 per week to ‘rent’ out the property, with the excess $200 allocated towards a deposit. When eventually there is enough of a deposit, the ‘buyer’ will approach the bank for a loan which will be used to settle the property.