RENT TO OWN PAYMENT PLAN
By Paul Adede
Rent-to-own is a rental purchase model that allows a prospective home buyer rent the house they intent to purchase for a certain period of time with the rental payments going towards clearing the house purchase price.
Superior Homes has set the maximum lease period to be 3 years. Rent to own was conceptualized to give potential home owners an opportunity to live in their houses as they pay for it over a period of time without taking up mortgage.
A rent-to-own agreement means the vendor has committed to sell their property to a tenant and the tenant has agreed to purchase the property for a pre-determined price within the 3 years’ time frame. This process starts by identifying the house of choice then doing a payment of a minimum of 50% of the purchase price before occupying the house.
Upon payment of a minimum of 50% of the purchase price, the balance of the purchase price is broken down into equal monthly installments to be paid within a maximum of 36 months (3 years).
Interest on the balance of the purchase price is restricted to 10% and charged on a reducing balance. This therefore means that the aforesaid balance of the purchase price that is structured into equal monthly rental payments incorporates the 10% interest.
Ownership of the property will transfer to the Tenant Buyer following receipt of the final payment of the purchase price.