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Buy or Rent to Own? Which is More Affordable?

Having your own dream house is a huge goal to achieve; making a down payment for it is a huge step towards that goal. It takes much consideration to buy your very own home as you need the perfect location for an affordable house and lot to live in. Affordable is a relative term and there are ways to find one thru alternative means such as the increasingly popular rent to own scheme. Take these houses in Cavite for example:

pagibig loan

These are examples of rent to own houses in Cavite from Pag-IBIG. The houses seem affordable since you only need to pay a downpayment and rent fee per month compared to buying a house and lot thru a loan. It’s a good option for first time homeowners as they can have a home quick and easy with no loan to think about. But is it economical over finding an affordable house and lot that you can call your own instantly? It’s time to find out if a rent to own scheme really is for you.

What is Rent to Own?

Rent to own is a practice of renting a house until you’ve paid enough to have bought it. The buying process is different since there would be an agreement of a possible sale in the future and either party will decide if the transaction will actually happen.

As the buyer rents, a portion of the payment reduces the amount of money needed to purchase the house. It makes for an affordable alternative to buying a house and lot. Great as it may seem, there are still some downsides with the rent to own concept, therefore, it still needs careful consideration before you sign a contract.

Pros

  • You don’t own it so that means less responsibility
  • There’s no loan so you can move out anytime
  • You save money on maintenance costs
  • You can live in an area where you can’t afford to buy a house
  • You can buy with bad credit
  • You can lock-in a purchase price
  • You can test before committing
  • You can save up until you can actually purchase the house
  • Some owners don’t charge for downpayment

Cons                        

  • Large up-front fee
  • There are restrictions so you can’t just renovate
  • No refunds if you won’t buy the house
  • Strict payment policy
  • You may be forced to leave if the owner gets foreclosed on
  • Higher interest rate
  • Risk of the seller tricking the buyer into forfeiting the contract
  • Hidden problems might surface once bought
  • Scams may happen

What to do Before You Sign a Contract

  • Treat it like a real home purchase
  • Beware of property in need of repairs
  • Opt for a home inspection
  • Gather up info about the owner or investment company
  • Qualify for a housing loan before you sign
  • Hire a real estate agent or lawyer to review the contract
  • You might score a lower downpayment or monthly rent

An Affordable Option

Having read and understood all the pros, cons, and tips you need to remember before committing to a rent to own house, all you need to do is to find a rent to own house  that will suit your needs.

You can try the homes displayed above as a starting point, but there are also other better rent to own properties with more amenities even in gated communities in Cavite.

Just keep looking for the potential home you’d like to buy someday and keep the factors above in mind; you’ll eventually score a good deal for a proper home.

All in all, it’s an option that can net you an affordable house and lot in the future if you plan it right and carefully. Rent to own homes give you the ability to live in a home that you can’t afford right away and grants you the advantage of location.

Property Input
Property Input is a real estate blog in the Philippines that talks about home, housing, lot, real estate, & property news, tips, and trends. Get the input you need on real estate here.

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