Rent to Buy!

elawlor2011

Hi

Would anyone have ANY advice on rent to buy? Im hearing good and bad things everywhere.

Our situation is, myself and my fiance are 22. We have lived out together since we were 20. We rented for a while and discovered that was a bad idea i.e high rent, small apartment and we moved home. We are currently in a mobile home for the last year and a half and want to move out by next spring.

We cannot get a mortgage for obvious reasons with the economy, and our age and Im only working part time and my fiance works in a bar so thered be no chance at the minute.

Rent to buy seems appealing. Find a house we like and agree to rent to buy with the landlord. Agree a price, pay a small deposit, pay rent untill we can get a mortgage maybe 3 or 4 years down the line and at least our rent money isnt dead.

We are also getting married in July 2013, so we would like to be settled in our home by then.

I would really appreciate any advice????

THanks :D:D

rcdk1

Even a quick google suggests Rent-to-Buy is not a good idea in general and especially in your situation.

You'd be much better off staying where you are or renting somewhere cheap and saving towards purchasing a house in the future.

The few that are listed on the internet are over priced both for the sale and rental prices.

These schemes fix a purchase price at the start even if the market price of the house falls during the lease.

If you don't have the financial ability to get/pay a mortgage now, what makes you believe that you will be able to afford it when the lease period is up? If you can not get a mortgage at that point you will lose your deposit and the "credit" part of the rent you've paid.

This is quite condescending and something no one wants to hear but given your age you need to ask whether you and your fiancée will still be to together in a few years time. Buying a house and entering into a mortgage together is a serious undertaking.

Also from what I can see you would be signing a Fixed Term Lease for 3 or more years. If you needed to leave within this period the landlord would be entitled to enforce the term of the lease.

I could go on but suffice it to say I wouldn't touch one of these with a barge pole. I apologise if my post seems harsh and/or condescending but my intention is to be "cruel to be kind".

washman3

rcdk1 wrote: »

Even a quick google suggests Rent-to-Buy is not a good idea in general and especially in your situation.

You'd be much better off staying where you are or renting somewhere cheap and saving towards purchasing a house in the future.

The few that are listed on the internet are over priced both for the sale and rental prices.

These schemes fix a purchase price at the start even if the market price of the house falls during the lease.

If you don't have the financial ability to get/pay a mortgage now, what makes you believe that you will be able to afford it when the lease period is up? If you can not get a mortgage at that point you will lose your deposit and the "credit" part of the rent you've paid.

This is quite condescending and something no one wants to hear but given your age you need to ask whether you and your fiancée will still be to together in a few years time. Buying a house and entering into a mortgage together is a serious undertaking.

Also from what I can see you would be signing a Fixed Term Lease for 3 or more years. If you needed to leave within this period the landlord would be entitled to enforce the term of the lease.

I could go on but suffice it to say I wouldn't touch one of these with a barge pole. I apologise if my post seems harsh and/or condescending but my intention is to be "cruel to be kind".

Could not get better advice IMO well said.

Mr. Loverman

It sounds like you are making a purely emotional decision to buy a property.

The facts from your post:

You are both in your early 20s.
Neither of you qualify for a mortgage because you both have low paying jobs (part-time/bar work).
You have an uneducated (no offence meant, just stating the facts) view of renting: you think it is dead money, and you think "rent to buy" sounds like an appealing deal.

You are not in a position to buy. What happens if one of you loses your job? From the sounds of it you are hardly in secure jobs with good prospects.

Also, I do not understand what the rush is. I am 33, always rented, and now I travel the world debt free. I would not be able to do this if I made poor financial decisions in the past.

I would highly recommend you continue renting, try to improve your education so you can improve you job prospects, and in general think long and hard about making a commitment which will trap you in Ireland. You are young, please don't mess up your life by making a poor financial decision and getting trapped.

Essien

I don't know the ins and outs of rent to buy but if rcdk1(above) is correct, then you would be buying a house in 3 or 4 years time based on a price agreed today. Considering the state of the market, that's a ridiculous idea.

At 22, you still have heaps of time to save up a decent deposit, even if you are renting and in low paying jobs.

If you buy now, you could spend more than the next decade scrimping and saving to pay your mortgage. Why not keep renting and do your scrimping and saving now instead(while you don't have kids*, or the threat of losing your home)? Put away whatever you can in the next 3-4 years and take a look at the market again after that time. Who knows, you might even have better, more secure jobs by then too.

Edit:*Actually, you may or may not have kids, I was just guessing

Victor

Rents in rent to buy properties tend to be higher than market rents.

Someone posted recently that they had done two years of rent to buy and when they asked to buy the property outright, the vendor refused to accept the current price. So, two years down the line, they are no closer to purchasing.

I think stay at home and save your money.

rcdk1

Essien wrote: »

I don't know the ins and outs of rent to buy but if rcdk1(above) is correct, then you would be buying a house in 3 or 4 years time based on a price agreed today. Considering the state of the market, that's a ridiculous idea.

From http://www.rent2buy.ie/faq.html

What happens if the value of the house has decreased from the agreed price?

With the terms of the scheme there is no obligation on the purchaser to proceed with the purchase at the end of the agreed period. However it may be possible to negotiate a lower price with the owner, but they are not obliged to do this. Rent2Buy will assist with this process.

If the vendor has your rent, deposit and an agreement saying you'll purchase at a higher price, then they're unlikely to negotiate.

elawlor2011

Thanks so much everyone for all your comments.
@rcdk1: Just wondering, do you know somebody that went through rent to buy? This mobile home will only really last us untill the spring i.e the fact that we will go stir crazy and the fact of harsh winters etc. We can actually afford a mortgage now, we just know we wont get one. My sister is in the middle of getting hers at the minute and her and her boyfriends situation is much better than ours and they are finding it very difficult. My fiance and I hope to be together forever hence why were getting married! We have been together for 6 years and are very happy so thats not a problem.
@Mr. Loverman: We still go on one or two holidays a year and plan to do that always, we are not 'travelling around the world' type of people, we prefer holidays. We have a dog also, so were more the secure, settled type. Thanks anyway, but we dont actually need to improve our education - I have a degree, I've been to college for four years and my fiance has a degree aswell. Bar work is actually his career, he has a degree in bar management and is working his way up. Im trying to find my 'career job' - Im still in my college job which is part time but pays commission.
@essien: We are not actually renting atm, were in a mobile home which we own ourselves. The main reason we dont want to rent is because were animal people (landlords rarely allow pets) . We do have a dog already so we would have to negotiate her in and we wouldnt be able to put our own stamp on the place - petty I know, but its just the way we feel.
@victor: We cant move home to either of our parents because of lack of room!! and we cant stay in the mobile after next year! Thanks anyway
Thanks everyone!!
Basically - We cant move back home and we cant stay in the mobile home after next year, our minds boggling!!!

shawnee

It is not true that all rent to buy schemes are bad. If one really wants to buy and sees the posibility of getting a mortgage in a few years time then this is a possibility. However I would say that the key to this is as in any property purchase drive a very hard bargain. Do your research and see that you are not being overcharged for the property. Look at the option of buying it now and see what the real price of the property is. I was speaking to a person who has paid a deposit in a house this morning. When he went to his accountant he told him that he was crazy buying a house now, even though he is self employed and has a good business and will not be under any major pressure to pay for his mortgage as his partner also works.
That same accountant would probably have told him to buy two houses three years ago.
Do careful research and talk to a few astute people and then decide .;) It is sometimes a good idea to run when all around you are walking

Mr. Loverman

Shawnee, rent-2-buy is only good for the builder; it is not good for the purchaser.

Here is it simply:

Property prices are currently dropping by a few hundred euro every day, so every week you wait you are probably saving yourself at least a month's wage.

Ireland and the EU are screwed. Our government are so awful we know they will continue kicking the can down the road, desperately trying not to be the government who realises we have no choice but to default. In effect this means we will continue to be a basket case for many years. Which means house prices will continue to drop as our economy get strangled a little more each year.

The best thing to do is to continue renting while saving money. This will mean:

a) you will save a lot of money on the price of your house. (For example, let's say you save 50k on the purchase price - this is actually more like 150k when you factor in how long it would take you to earn 50k after tax, and how much interest you will save over the life of the mortgage).
b) you will have a larger deposit which means a smaller mortgage which means more disposable income, less interest to pay, and less of a noose around your neck.
c) your dream house will be more affordable, so it is quite likely the house you can buy in a few years for less money will be a lot nicer than the house you can buy today.

The builders know this hence why they are trying to get you to emotionally connect with your home now, knowing you will pay over the odds for it when it becomes time to buy.

By all means, if you just want to buy a house and don't care about losing money, then go for it. But just don't fool yourself into thinking now is the time to buy, or rent-2-buy is a good deal, or "rent is dead money", or any other fallacy.

I'm not anti-buying, I just don't see the point in overpaying for property, that's all.

rcdk1

elawlor2011 wrote: »

@rcdk1: Just wondering, do you know somebody that went through rent to buy? This mobile home will only really last us untill the spring i.e the fact that we will go stir crazy and the fact of harsh winters etc. We can actually afford a mortgage now, we just know we wont get one. My sister is in the middle of getting hers at the minute and her and her boyfriends situation is much better than ours and they are finding it very difficult. My fiance and I hope to be together forever hence why were getting married! We have been together for 6 years and are very happy so thats not a problem.

To be honest I don't know anyone but I've been aware of this type of scheme for a while having had a look at it a few years ago. You could try contacting Evonatron and FunkyMissMonkey who posted positive comments on this thread: http://www.boards.ie/vbulletin/showthread.php?p=74318597

I understand your desire for a home (I'm a homeowner/familyman with a wife and 2.4 kids. Still working on getting a dog!) and I'm not against buying a house as long as people know exactly what they're getting into. I still think that rent-to-buy is a bad idea with the possible exception of the scheme Dublin Corporation had 1-2 years ago, although that was for apartments.

elawlor2011

rcdk1 wrote: »

elawlor2011 wrote: »

@rcdk1: Just wondering, do you know somebody that went through rent to buy? This mobile home will only really last us untill the spring i.e the fact that we will go stir crazy and the fact of harsh winters etc. We can actually afford a mortgage now, we just know we wont get one. My sister is in the middle of getting hers at the minute and her and her boyfriends situation is much better than ours and they are finding it very difficult. My fiance and I hope to be together forever hence why were getting married! We have been together for 6 years and are very happy so thats not a problem.

To be honest I don't know anyone but I've been aware of this type of scheme for a while having had a look at it a few years ago. You could try contacting Evonatron and FunkyMissMonkey who posted positive comments on this thread: http://www.boards.ie/vbulletin/showthread.php?p=74318597

I understand your desire for a home (I'm a homeowner/familyman with a wife and 2.4 kids. Still working on getting a dog!) and I'm not against buying a house as long as people know exactly what they're getting into. I still think that rent-to-buy is a bad idea with the possible exception of the scheme Dublin Corporation had 1-2 years ago, although that was for apartments.

Thanks a million :-D

D3PO

shawnee wrote: »

It is not true that all rent to buy schemes are bad.

yes it is. Point me to one person or post on this forum that says they bave bought after rent to buy and are happy.

You wont find one. Not one because its not a good deal for a buyer and Id suggest the way they are structured in the main it would be impossible to get a mortgage anyway.

username123

OP - imo, you and your fiance are way way too young to be thinking of saddling yourselves with a rent-to-buy scheme - or a mortgage at all.

Youre both only 22. Rent to buy is NOT a good idea. A mortgage in the current economic environment with the house prices still dropping is NOT a good idea.

You have years left ahead of yourselves to save up, get career and financial security, and wait until you can hand over a large deposit for the place of your dreams.

Seriously, enjoy life without a massive financial burden hanging over your heads!! You'll be long enough paying a mortgage I promise!

You need to rethink your attitude on 'rent is dead money' - mortgage interest is deader money, plus youre stuck with the debt even when the house is worth a fraction of what you paid for it, plus the cost of upkeep, maintenance etc..

Im sure you could find somewhere to rent that allows a pet. And I see no reason why you cant put your stamp on a rented home? Home is where you make it.

Youre both obviously straight out of college, in a country with few prospects right now, you are VERY young, and youre talking about renting to buy, mortgages, getting married, owning pets etc....I think you should both live a little, life is short and your 20s should be fun years, not years saddled with large financial responsibilities.

mrgaa1

http://www.firstbuyni.org/what-is-firstbuyni/

This is a scheme they are piloting in Northern Ireland at present