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South Coast Property Specialists (Carlene Franzen) Tips #1084: Rent-To-Own: An Option for Some First Home Buyers

One of the major inhibitors for first home buyers in getting into the market is raising enough money for the deposit. With the huge increase in property values over the past couple of years, this issue continues to get worse. Typically, the deposit is 10% so even if you are purchasing something quite modest (in today’s market) for $600,000 then you need to find a lazy $60,000 for the deposit. So, what are the options for first home buyers in getting this money together? The most obvious one is the well-used “Mum and Dad Bank”. Many young people have to rely on their parents in helping them out with the deposit. This can sometimes be tricky as some parents may want to take a legal interest in the property and we all know how loaning money between family members isn’t always as straightforward as it may seem. The feeling of “indebtedness” can put stresses and strains within the family. Another option is a somewhat new idea of “Rent-To-Own”. One new operator in this type of business is OwnHome who the CBA has invested in. Before we go any further, we wish to state that we do not recommend either of these businesses over others in the market but we mention them by way of example. In the OwnHome model you apply to OwnHome and they carry out an assessment of your suitability for this type of product. You then choose your home and pay a 1.5% starter fee to kick start the home buying process. Then when OwnHome buys your home, you put in 1% that accrues as a Purchase Offset and you move into your home straight away.

By making simple monthly payments (a bit like renting), you build your Purchase Offset in your home every single month. Each year, you build your Purchase Offset equal to 2.5% of your home value. Then when you are ready, you can buy the house from OwnHome at any time between 3-7 years at the pre-agreed price. OwnHome claim: “We protect you from a runaway market by agreeing the OwnHome price that grows at 3.8% per year. You keep all the upside above this and get certainty in an uncertain world.” So, while this approach may not interest everyone, it is one mechanism for getting around the issue of accumulating a deposit while you are still trying to pay the rent. Many people can afford monthly payments but saving a bulk amount is another challenge again. As with all financial transactions, we recommend that you do your research, look around and seek financial advice from a qualified financial advisor.

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Feb 18th - Tony Williams at the Batemans Bay Soldiers Club Feb 18th - Tony Jaggers at Last Tango in Oz Moruya Golf Club

Feb 19th - Minnie & The Moonrakers at The Batemans Bay Foreshore 2:30pm to 4:30pm Feb 19th - Tony Williams at the Batemans Bay Soldiers Club Feb 19th - Sco Hartne at Tomakin Social Club Feb 19th - Chris McGrath at Club Catalina Feb 19th - The Reprisals at Club Tuross Feb 20th - Salt – Club Narooma (3pm) Feb 26th - Aaron – Solo West from 7:30pm at Club Catalina Feb 26th - Drew Tone Duo at Tomakin Social Club Feb 26th - Rick Bamford at Club Tuross Mar 3rd -The Catholics –Paid event cket pricing TBC at the Moruya Golf Club Mar 5th - Sirenics from 7:30pm at Club Catalina