| Did You Know That You Can Buy Your Next Private | | | | loan if you have bad credit. If you are buying a |
| Residence For just one pound or one dollar? | | | | property on a lease option because you don't have a |
| Do you want to buy the house that you've always | | | | big enough deposit for a conventional mortgage then |
| wanted to live in, the house of your dreams? | | | | ask yourself "where will this money come from at the |
| Don't have enough credit or big enough deposit to put | | | | end of the rental term when I exercise my option buy |
| down on the property of your dreams? | | | | the property?" |
| If you answered yes to the above two questions then | | | | The final question you need to ask yourself is |
| this article will show you how you can achieve your | | | | "how much can I afford as a monthly payment" Your |
| dream and live in the house that you never thought | | | | lease will be a FRI Lease (full repairing and insuring |
| you would be able to. This is achieved by using a | | | | lease) which means you will be responsible for repairs |
| unique property financing instrument called "lease | | | | which means a rental payment of 30% less than |
| option". A lease option is sometimes referred to "rent | | | | market rent is perfect reasonable. If you want to get |
| to own" or "lease to buy" scheme. | | | | really creative, it is possible to have a portion of your |
| Lease options are simple and allow you to have | | | | monthly payment go toward your purchase but |
| complete control of a property if you have trouble | | | | expect to pay slightly above market rent in this case. |
| obtaining traditional bank finance. This means that you | | | | However this will depend on what you agree with the |
| can purchase a property using a lease option despite | | | | seller. |
| not having a big enough deposit or excellent credit. | | | | 2) This step involves finding a property that you'd like |
| The way lease options work is by you leasing (renting) | | | | to buy. Ensure that you look for properties that you |
| a property from an individual and then having a | | | | can actually afford. You can place an advert in your |
| separate agreement with them which allows you the | | | | local paper to attract sellers. Use the following ad |
| option to buy the property at the end of the lease | | | | which can also be posted on a piece of paper through |
| term. This means that you could buy a property worth | | | | letterboxes of your target properties. |
| maybe double the amount you thought you could | | | | Professional Couple, Looking to Rent A 3+ Bedroom |
| afford. The reason for this is because you negotiate a | | | | Property In The Local Area With The Option To Buy |
| rent with the seller and therefore your payments can | | | | This advert will ensure that only qualified owners call |
| be significantly lower than the payments you would | | | | you. The types of sellers you want to be dealing with |
| make to the bank. | | | | are those that do need a huge amount of money to |
| Below there are 7 Steps that You need to follow to | | | | move forward. They may even be sellers that have |
| purchase your dream home for just one pound or | | | | little or no equity or the sellers could be frustrated |
| dollar: | | | | landlords. |
| 1) Ask yourself why you would buy a property using a | | | | 3) If you've got your seller to agree to a lease option |
| lease option. If you have clean credit, have a sufficient | | | | proposal the next step is to negotiate the terms of the |
| enough deposit then it may just be better for you to | | | | lease option. |
| obtain a conventional bank loan to buy your next | | | | Negotiate: |
| private residence. | | | | The Purchase Price |
| If you are buying of a distressed seller that owes | | | | Term of The Lease (12 - 60 months) Can be |
| close to what his property is worth then it is possible to | | | | much longer if you are buying from a seller that does |
| buy the property for a nominal sum as little as one | | | | not have a lot of equity because they are not |
| pound or dollar plus legal fees of around 600 pounds. | | | | expecting any money - the money they receive will be |
| Otherwise expect to pay the seller 3-5% of the | | | | paid to the bank so the term in these cases can be |
| market value of the property. Ask yourself, how much | | | | significantly longer. |
| can you afford to pay as an option fee (to have the | | | | Rent Credits Will a portion of the rent go towards |
| right to buy the property from the seller) The | | | | the purchase? |
| differences between the houses you can buy for by | | | | 4) Make your monthly payments. These are made just |
| paying the seller 3-5% of the value to control with a | | | | like renting a conventional property. You can pay these |
| lease option are significantly different to the properties | | | | directly to the seller, in cases of where the seller has |
| you can pick up for one pound. If you do decide to put | | | | little equity these payments can be made directly to |
| down 3-5% of the market value, ensure that you | | | | the bank and any surplus payment to the seller. |
| agree with the seller for this option payment to be | | | | 5) Look to make home improvements and increase its |
| credited to your purchase. However understand that | | | | overall value. Any value you add to the property is |
| should you decide not to buy the property at the end | | | | your equity. The more equity you have in the property |
| of your rental term then you will lose this option fee. | | | | when you come to exercise your option the higher the |
| Ask yourself is the area your buying your next | | | | chance of you getting a favourable mortgage in terms |
| property in an area that you actually want to live in? | | | | of interest rate and the amount you put down as a |
| There's no point in buying your dream house in an area | | | | deposit. |
| you don't want to live in! Do not make this mistake that | | | | 6) Apply for a loan at the end of your lease term. |
| so many people make. If you find that you don't want | | | | Ensure you do this 2-3 months before your term |
| to live in that area then you will lose your option fee. | | | | expires. Make sure you use a mortgage broker, |
| The most important question you need to ask | | | | preferably one that has access to all the mortgage |
| yourself is, "how will I finance this property at the end | | | | products in the market place. |
| of the lease term and cash out my seller?" You need | | | | 7) Complete on your dream home at the end of your |
| to have a plan otherwise you will lose your option fee. | | | | lease term. When you receive funds from the |
| Only buy a property on a lease option if you know you | | | | mortgage company, your solicitor will send the money |
| will be able to finance it at the end. Speak to mortgage | | | | to the seller. Congratulations! You are now |
| brokers/financial advisors to understand what you | | | | homeowner living in the property of your dreams! |
| need to do to increase your chances of getting a bank | | | | |