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RENTING-TO-OWN
What about renting-to-own? Of course it's an option, if you still do not have enough savings or don't know whether to invest in a home
This could be a great option if you are thinking of buying your first home soon, but you want extra certainty. More certainty about the house, about your savings, about your future, or about financing options and types of mortgages. Investing in a rent-to-own can give you that extra time. And is anyone in a hurry?
- While you are renting, you have the purchase option reserved for you.
- Here are the pros and cons of this option.
- Remember that to buy a house you need to be able to provide 20% of the price.
- You can negotiate terms, the initial premium and other conditions.
An oft-asked question: but what exactly is a rent-to-own?
The name says it all, but here is a brief description anyway: it is a normal rental agreement that includes the option whereby, within a time period agreed by both parties, you have the right to buy the house for the price you agreed on, discounting part or all of the amounts that you have been paying for the rent. If you are interested, we can give you more details.
A dual contract
Or a mixture, including rental agreement clauses and sale agreement clauses. The rental period and the right-to-buy period are stated. It should also include:
- Rental amount.
- Final sale price.
- Percentage of instalments to be discounted.
- Amount of initial premium.
With guarantees for the owner
If you are the owner of the house, you are assured the sale of the house, and if not, you will have received the monthly rent payments plus the initial premium.
- You have tax advantages.
- You know they will take care of your house.
- You get rental until the purchase.
- The initial premium ensures you a real interest for the purchase.
And there are guarantees for the tenant
If you are the future buyer, know that you can live in that house for the duration of the contract and that the seller must sell it to you if this is stated in the contract.
- No one will take your house away.
- You will know whether you like the house before you decide whether it is to be yours.
- You are under no obligation of buying it.
- A large part of the rent that you have paid will be deducted.
So, is it a great idea or a bad idea? We will you tell you the pros and cons of renting-to-own.
Well, it's neither a great idea nor a bad one, it's somewhere in between. Renting-to-own has its advantages and disadvantages that depend on many circumstances or situations. And although we will give you the black and white of it, as you already know life is full of shades in between.
If you are the tenant and future buyer
- You deduct a part of what you pay for rent plus the initial premium from the purchase price.
- The purchase will be insured for the time that you have agreed with the owner.
- You can buy it at any time and you decide. And you are not obliged to do so either.
- Since you have a closed sale price, if the market has risen, you will be making a good saving. And if it has dropped, you can always discard the purchase.
If you are the owner
- By renting the house you will make money straight away and will not have to give up the sale.
- You are ensuring the sale in the short term or, otherwise, you will have obtained a certain financial compensation.
- As there is an initial premium that is usually higher than a deposit, rental non-payments are very rare.
- While the house is for rent, you will have tax benefits.
If you are the tenant and future buyer
- If you finally choose not to buy the home, you will lose the initial premium.
- If prices go down while you are choosing whether or not to buy the home, you will not be able to benefit from the premium because you will have already established a set price in advance. (except if there is a new negotiation with the owner).
If you are the owner
- If the tenant finally chooses not to buy the home, you may have wasted time if you were eager to sell it.
- If a better offer appears or prices go up, you have your hands tied.
- You cannot choose when it is best to sell it within the agreed period. This will depend on what the tenant wants to do.
Does the house that you like fit within your budget? We will help you get the price of your house and your mortgage right.
- A simulator that tells you if the house you want is the one you can buy.
- Based on your savings or your age you can find out the price you can pay for your house.
- Based on your wage you will find out the maximum amount of your mortgage.
Rental Savings Plan
Wanting to buy a house in a few years can give you money right now.
There is a Bankinter service called BK Rental1 that pays you 10% of your monthly rental fee if you pay it from your Bankinter account.
How does it work? Very easy! Supposing you pay a monthly rent of €800 for six months – the monthly average would be €800. So the bonus paid into your virtual piggy bank would be €800x(10%/2)=€40 gross.
Everything you earn is stored semi-annually in a virtual piggy bank, up to a maximum of € 500, to use it on the day you sign your mortgage with us.
Your questions, and those asked by almost everyone else
With what you pay on rent could you pay a mortgage?
Useful information
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Show/Hide legal text1 Rental Savings Plan will be calculated on a maximum amount of €1,000. The amount will be paid twice a year and you must be under 36 years old.