Rent to Own

Rent to Own FAQs

• What is the rental trap?

  The "rental trap" refers to the situation where individuals or families are caught in a cycle of renting properties and find it difficult to save enough money to buy their own home. This cycle can be challenging to break for several reasons:

  1. High Rental Costs: A significant portion of a renter's income is spent on rent, leaving little room for savings.
  2. Living Expenses: Alongside rent, other living expenses such as utilities, groceries, and transportation further reduce the ability to save.
  3. Rising Property Prices: As property prices increase, the amount needed for a deposit also rises, making it even harder for renters to save enough.
  4. Low Wages: Incomes that do not keep pace with the rising cost of living and property prices make it difficult to accumulate savings.
  5. Debt Obligations: Existing debts, such as student loans or credit card debt, can further strain financial resources.
  6. Market Conditions: Competitive housing markets can push rental prices higher, adding to the challenge.

  Even if you have been rejected for a home loan; Rapid Finance could help you break out of the rental trap. We have over 20 years experience assisting people get their mortgages approved, even with low deposits or bad credit issues.

• How does a rent-to-own agreement work?

  A rent-to-own agreement allows you to rent a home with the option to purchase it at the end of the lease period. Part of your rent payments may be applied towards the purchase price of the home, helping you build equity over time.

• How long is the typical lease period in a rent-to-own agreement?

  The lease period for a rent-to-own home typically ranges from one to five years, but it can vary based on the agreement between the tenant and the property owner.

• How is the purchase price of a rent-to-own home decided?

  The purchase price is usually agreed upon at the start of the lease. It can be based on the current market value of the home or a future estimated value, providing protection against potential price increases.

• Can the purchase price be negotiated in a rent-to-own agreement?

  Yes, the purchase price can often be negotiated before the agreement is finalised. It's advisable to ensure the price reflects a fair market value.

• What are the benefits of rent-to-own homes?

  Benefits include building equity while renting, locking in the purchase price, improving your credit score, and having time to save for a deposit.

• Can I get a rent-to-own home with bad credit?

  Yes, it is possible. Rent-to-own agreements are often designed for individuals with bad credit, providing an opportunity to improve creditworthiness over time. However, there are other options, see our bad credit home loans page to learn more.

• Will I need a credit check for a rent-to-own home?

  It depends on the provider, but many rent-to-own agreements do not require a traditional credit check, making them accessible to those with poor credit history.

• Can I improve my credit score with a rent-to-own home package?

  Yes, consistent and timely rent payments can positively impact your credit score, especially if reported to credit bureaus.

• Can I cancel my rent-to-own agreement at any time?

  Cancelling a rent-to-own agreement may result in the loss of any option fee and rent credits. The specific terms will be outlined in your agreement.

• What happens if I decide not to purchase the home at the end of the lease?

  If you decide not to purchase the home, you may lose any rent credits and the option fee. However, you can move out at the end of the lease without any further obligation to buy.

• Are there any other home loan options with a low deposit?

  Yes, Rapid Finance offers various home loan options with a low deposit. Our team can help you explore alternatives tailored to your financial situation.

• How can I qualify for a home loan with Rapid Finance?

  To meet our basic criteria for a home loan with Rapid Finance, you must be an Australian citizen or permanent resident, over 18 years old, earn over $700 per week, and have unpaid defaults under $5,000.

• What are the alternatives to rent-to-own agreements?

  Alternatives include traditional home loans, low deposit home loans, bad credit home loans, government assistance programs, and shared equity schemes. Rapid Finance can help you explore these options based on your financial needs.

• Can I get a rent-to-own car?

  While Rapid Finance does not offer rent to own car agreements, we can assist with various car loan options, including those for individuals with bad credit.