If you are young and you do not have enough savings to cover the purchase of a home (remember that most banks only finance 80% of their value), perhaps rent with option to buy is the best way to access a house in the property.
Rental contracts with purchase option are regulated by the Urban Rental Law (LAU) and are a formula increasingly used by people who do not have enough money to meet the initial costs of buying a home.
WHAT IS RENT WITH OPTION TO PURCHASE
This method offers you the possibility of living for rent for a number of years and, after the agreed period, sign a sales contract that will allow you to be the absolute owner of that home, with the great advantage that all the money you pay for the rent (or a part of it, according to the agreement) is deducted from the final price of the property .
We explain it to you with an example so you can understand it more easily. Imagine that you sign a rental contract with an option to purchase a home that costs 100,000 euros. In the contract you agree to a rental period of five years and a lease fee of 400 euros per month. One hundred percent of that amount will be deducted from the final price of the home. After five years, the purchase option will be executed.
With these conditions, after five years have passed you have paid a total of 24,000 euros in rent (4,800 euros each year), so you only need to ask for a mortgage of 76,000 euros to make the house yours . For the 24,000 euros that you have already paid, you will not have to pay interest and the costs of setting up the mortgage will be lower.
THE ADVANTAGES OF RENTING WITH OPTION TO PURCHASE
As you can see, rent with option to buy offers a very interesting opportunity to own a home, especially if you are young and have no savings. We summarize all its advantages:
1º. The money that you are paying each month for the rent is money that you will not pay for a mortgage. Being the minor mortgage, so will your interests. Following the previous example, we assure you that the interest corresponding to 24,000 euros would have been very high.
2º. If you do not deliver a guaranteed signal at the beginning of the contract, you are assured, free of charge, that the house will be for you, since the owner can not sell it to another person. If you repent and decide not to buy it, nothing will happen and you will only have paid a rent. As is logical, in case you have paid a signal and decide not to buy, you will lose the money of that signal, unless you reach an agreement with the owner.
3º. You guarantee that the price of the home will not go up (eye, or down), since in the contract the sale price is agreed for when the rental period passes.
4th You can save for mortgage expenses. . That money you save each month can be used to pay the mortgage expenses, which are around 12% of the sale price and almost no bank finances them. These expenses (notary, registry, agency, tax of documented legal acts …) will also be lower because the mortgage you need is less.
As you can see, the advantages are very attractive, especially for young people, who are the group with the greatest difficulty in accessing a home in Spain.