what about rent to buy????

miss luce

hi all. just wondering about rent to buy as an option for us. we're not really what the bank is looking for these days, as we have no savings, and bit of debt. not huge amount of debt, car loan and credit union loan and credit card, say bout 28000 altogether. god, that sounds bad actually doesnt it?:eek:

the housing estate that we're renting in at the mo would have a few houses available for rent to buy? would this be an option for us? is it a good idea?

any thoughts or advice would be much appreciated.

also, would diff developers operate it differently, as in regards the amount that would go towards your deposit?

D3PO

bad idea.

so you agree to buy somewhere say for 200k pay rent for x amount of time then use that as a deposit to buy. Problem is prices are falling so your LTV will be too high and you wont get a mortgage so you wont be able to buy.

or in the unlikely chance you do get mortgage approval you will be overpaying for the house.

rent to buy wouild only be a good idea in a rising market

Little Miss Cutie

I think it depends on the contract. I know my BIL has just moved into a R2B, in the contract it says that 100% of the rent goes to the deposit and that the final purchase price will be agreed at the end of 3 years by an independant valuer which I think is a very good deal.
It is something I would consider doing.

D3PO

Little Miss Cutie wrote: »

I think it depends on the contract. I know my BIL has just moved into a R2B, in the contract it says that 100% of the rent goes to the deposit and that the final purchase price will be agreed at the end of 3 years by an independant valuer which I think is a very good deal.
It is something I would consider doing.

In that circumstance it would be fine. But who is this independant valuer ? what rights have you got in the selection of the valuer ? id still be very wary

marvsins

What price range are you considering purchasing at ?

miss luce

we really dont want to spend over 250000. we'd be able to clear some of our debt by selling car. that would put us in a more favourable position i think. i have only had a brief conversation with one of the developer/builders about rent to buy, but just wanted to get a bit of info together before speaking to them, and them knowing that my partner and myself know nothing about this rent to buy. we're going to the show house on sun, and the man in charge will be there.
i think what one of the posters said about house prices falling is a very good point. had not considered that. we are just so desperate to be getting somewhere with our savings etc.. its so hard. it feels like its going to be years before we can buy at this rate!!!:(
we really like these houses, and this is the last one left of this type. they sold the other remaining 2 in last few weeks. i know it shouldnt be rushed into, but they mightnt even agree to rent to buy for us.
i think you might have to have a 5000 deposit. think i read that in a newspaper article at some stage. could a 5 year term renting term be
agreed? or is it mainly 1 year? it would be great motivation to get going on saving, knowing that there was a deadline.
thakns for thoughts

Kimia

Why are you in such a rush OP? I used to be like that - I would have loved to buy my own house with my OH but we've been renting now for 4 years and to be honest, I'll just keep renting until I've saved up a HUGE deposit so that I don't have to get into huge debt with a bank.

There's a great article somewhere about rent not being dead money but actually an excellent way to not get caught in the property trap - if someone knows the link they may post it for you? It really is a good article and helped put my mind at ease when I got the fear of 'oh my god i don't own a house yet and i'm 30!'.

marvsins

rent not being dead money but actually an excellent way to not get caught in the property trap

This was true from 2005 - late '07 early '08 when prices sky rocketed but the prices have come back to the '05 levels. Example - a friend bought in apr '06 for €380,000, my cousin bought 3 doors down in oct. '09 for €235,000. There the exact same house except my cousin has a attic converted into a bedroom. If you paid €900/month for 40 months thats €36,000 so obviously my cuz saved a fortune. If you buy today prices will probably continue to drop a bit over next 12 months. If i was buying my biggest worry is whats going to happen when the NAMA houses start to hit the market. I've already heard of house in east Cork selling for €100,000 they were in the high 300's a couple years ago.

D3PO

marvsins wrote: »

. Example - a friend bought in apr '06 for €380,000, my cousin bought 3 doors down in oct. '09 for €235,000. There the exact same house except my cousin has a attic converted into a bedroom. If you paid €900/month for 40 months thats €36,000 so obviously my cuz saved a fortune. .

Not always true.

If in the above example your friend got a tracker mortgage and your cousin is on a variable, you will find the gap between what they end up paying in total for their houses will be much closer than you think

kmick

How much is the rent to buy agreement monthly cost compared to your current rent. Like most things the devil is in detail. If you had saved a deposit of 25,000 you wuld be in a much stronger postion to bargain on that 250k asking price rather than depending on some "independant surveyor" at some point in the future.

The_Conductor

marvsins wrote: »

If you buy today prices will probably continue to drop a bit over next 12 months. If i was buying my biggest worry is whats going to happen when the NAMA houses start to hit the market. I've already heard of house in east Cork selling for €100,000 they were in the high 300's a couple years ago.

To be perfectly honest- as normalisation of interest rates starts to occur- which will involve an increase in ECB base rates from their current 1% to 4.5%- probably over a 24-36 month period- thats when the real falls in property prices will start to occur.

I genuinely don't think the falls thus far are comparable to the falls down the road- when interest rates return to normal levels.

shoegirl

miss luce wrote: »

hi all. just wondering about rent to buy as an option for us. we're not really what the bank is looking for these days, as we have no savings, and bit of debt. not huge amount of debt, car loan and credit union loan and credit card, say bout 28000 altogether. god, that sounds bad actually doesnt it?:eek:?

I have to say it is rather a lot!!
Beware of rent to buy in the current climate. If the developer goes bust bang goes your deposit unless it is secured into some kind of untouchable trust, which I very much doubt it is.

Its a great idea but needs a proper foundation so people don't lose their rent already paid if anything goes wrong with the vendor.