Property Connected were marketing this lovely cottage in a valley area, and met with Lynette. She loved the house and could see its potential, but realised that it need at the very least, sell redecoration from top to bottom!
This is what the figures looked like when Lynette bought:
Purchase price: £57,500
Monthly fee (rent only): £325
Term: Up to 5 years to buy
Lynnette was already saving around £250 per month in rent from her previous home, so decided to put this in a savings towards the purchase price, she had already paid the £3,500 downpayment which meant that she has a balance of £54,000 to pay when she opts to buy, which would be anytime in the next 5 years.
The other thing that Lynnette decided to do over time os to smarten up the house, refurbishing and redecorating while living there. A similar property that was of a nice standard sold recently in the same street for £75,000, so Lynnette know that just by smartening up the house, it could then be valued at around £75,000, giving her an instant equity uplift of £17,500.
The other thing to help the valuation will be time. The property market in this area has been very slowly recovering from the market crash, house prices are around the same as they were in 2007 and are very steadily rising. So depending on what the valuation would be in 5 years time, Lynnette feels that it will be more than £75,000.
Lynnette is planning to save as much as she can, to then put with a very short term mortgage, sometime in the next 5 years, which could look something like this:
Balance remaining to purchase: £54,000
Saved monthly: around £15,000
Deepening on getting the right legal and financial advice, Lynnette could be looking at a £39,000 mortgage to cover the rest.
With an estimated (depending on market conditions) valuation of £80,000, this would be less that 50% of its current market value, making it a really affordable option for Lynnette.
Lynnette is really enjoying making her new home her own, and has really used the rent to buy method of buying to suit her situation.
If you’d like to look for a Rent To Buy property in your area, please get in touch and we can add you to our list of tenant buyers.