Rent to buy scheme How does it work? What do you think of proposal for unfinished hse

Hi all

I am looking for some advice/help on a rent to buy property.

Myself and partner recently found a house offering rent to buy option. The property is new and not finished.

We have been told by letting agent that it would cost in the region of 25k to finish the property. The monthly rent is 450 and renting can be over 5years.

Only problem is he said its not the rent tat goes towards your deposit for mortage, it will be whatever money you put into the house(the 25k).

I dont understand how this would work.

Would a bank give you a mortage without actually phyiscially having a deposit, the money would be spent.

It is a 4bedroomed house and asking price is 150k after you spend 25k to finish it.

Any help on this would be brillant..Thanks

Hi OP,

I am in a rent to buy scheme at the moment. The purpose of the scheme is to allow people to save for a deposit which they can physically put down when it comes to getting a mortgage. I don't see how your current situation is RTB at all - you are effectively paying for the house to be finished and, please correct me if i am wrong, will not have a deposit when it comes to approaching the banks.

My house was not pretty finished, but I still got to go in and do a snagging list before I moved in (which is actually ongoing but hey!). Personally, if i were you, i would be saying to the developer to finish the house and THEN you will enter the scheme on the property. To be brutally honest, would you not look elsewhere? There are plenty of other developments where RTB schemes are running where houses are finished.

FYI - I am paying €1000pcm for 2 years and receive €500pcm month, i.e. €12,000 at the end of tenancy. I have a friend on the development who were refused a mortgage and told to reapply after 6 months, and they asked the developer to extend the RTB for 6 months which they happily agreed to. One thing I am worried about is going to the bank with the developers deposit - i have heard that they will not recognise the RTB scheme as a saving.

I know that there are some reservations from people on here about the scheme, but I took weeks to trawl through the contracts, ensured I had certain clauses put in, and made sure I was 100% happy before I proceeded. Take your time, there are plenty of places out there.

Hope this helps

Hi TT,

Ive expanded your title let me know if its ok.

Im moving the thread from Property investment and tenants' rights to Mortgages and buying and selling homes as it is essentially a (deferred) house purchase decision from your point of view.

aj
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