If you’re considering the Rent-to-Buy Scheme as a way to get into the property market, you’ll want to read our FAQs below. The Rent-to-Buy Scheme is a great way for first home buyers to get their foot in the door, and with property prices increasing all the time, it’s an attractive option for many people. Keep reading for more information on how the scheme works!
What is the Rent-to-Buy Scheme in Australia?
The Rent-to-Buy Scheme is a government initiative that allows first home buyers to enter the property market with a reduced deposit. The scheme works by allowing buyers to rent a property for up to five years, during which time they will save money for a deposit. At the end of the five years, the buyer will have the option to purchase the property or move out.
What are the benefits of the scheme?
There are many benefits of the scheme, including:
- Reduced deposit: The main benefit of the scheme is that it allows buyers to enter the property market with a reduced deposit.
- Flexibility: The scheme offers buyers flexibility, as they can move out at the end of the five years if they wish.
- Save money: The scheme also allows buyers to save money, as they will not be required to pay mortgage repayments during the five years.
What are the eligibility requirements?
To be eligible for the scheme, buyers must:
- Be a first home buyer
- Have a minimum deposit of five per cent
- Meet the income requirements
- Be a citizen or permanent resident of Australia
If you meet the eligibility requirements, you can apply for the scheme through your chosen financial institution. Once your application has been approved, you will be able to enter into a contract with the seller.
What properties are available through the scheme?
The Rent-to-Buy Scheme is available on all properties listed for sale through participating real estate agents. To find out if a property is available through the scheme, you can ask the real estate agent when you are viewing the property. Typically, it includes all those listed on Realestate or Domain.
How does the scheme work?
Rent-to-own homes work by allowing you to enter into a contract with the seller of the property. The contract will specify the purchase price of the property and the amount of rent you will need to pay each week or month; the contract will also specify the length of time you have to rent the property before you must purchase it.
The main advantage of rent-to-own homes is that they provide an opportunity for you to get into the property market sooner than you may be able to if you were trying to purchase a property outright.
Is it possible to access the scheme even with bad credit?
Yes, it is possible to access the scheme even with bad credit. You may need to provide a larger deposit than someone with good credit, but you should still be able to find a rent-to-own home that suits your needs. What do you have to lose? You may as well apply for the scheme and see what feedback you get (while also doing everything you can to continually boost your score, of course!).
Do I need to pay a bond on a Rent-to-Buy property?
No, you do not need to pay a bond on a Rent-to-Buy property. This is one of the benefits of the scheme. You will, however, be required to pay a holding deposit, which is generally around one week’s rent.
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