Creative way to buy PPoR

[Graemsay]

I'm with Boomtown and Belbo.

In many cases it's cheaper to rent than buy, and property prices (in general) have been falling. I don't see a lot of upsides in owning right now.

Furthermore create and finance tend to be synonyms for risky and expensive. Whoever is doing the lending will be building in a margin to account for the fact that they're lending or leasing to someone with an above average chance of default. That'll cost you.

My suggestion would be to rent somewhere, ideally smaller and cheaper than you want to buy, and save up a deposit. It'll be less risky for bother yourself and the bank, which should make it cheaper. Prices are unlikely to run away in the short term, and if they keep on slipping then that'll improve affordability.

 

[tbow]

For those playing along at home I thought I would give an update.

We have begun making some inquires and have had some amazing responses. From 4, 2 have got back to us with interest.

We're approaching with the request for a long lease with a view to purchase.

About to get into details with one prospect. House was on the market for a while as it is coming to the end of a lease and the tennants are moving. Didn't sell. We'll be offering an option, probably just a normal lease but for the same term as the option.

I'd be looking to pay as little as possible for the option fee as the market is my biggest concern. If we have a drop in prices we'd be better off walking away rather than exercising our option. So that is the big question.

No discussion has mentioned inflating the price of the property.

 

[Lofty]

Hi tbow

As regards splitting up the total weekly payment into the Option Fee and the Rent, just leave that until you are instructing the solicitor to draw up the paperwork.

Yes, always make sure your Lease runs for the same time as the Option.

At this point it's up to you to negotiate the lowest possible Upfront Option Fee and the longest Lease & Option you can get. We can work out later if you'll need an Ongoing Option Fee.

Once you've settled on the Upfront Option Fee and the term of the Lease & Option it's time to negotiate the 'price credit' (sometimes called the 'rent credit' or 'equity credit'). I simply ask, "how much or the rent will be credited towards my deposit?" You'll be amazed at the great results you can get from this question. Obviously, the higher the better for you ;-)

Cheers, Paul

 

[china]

Tbow

There is an investment company out there that puts people who are cash rich - that is, have sizeable nest eggs -, but cashflow poor, e.g. retirees, recipients of inheritances, in touch with people who have good cashflow but no sizeable nest egg. (that is, no deposit) with the purpose of purchasing property either for investment or PPOR. I remember reading about this in the newspaper but cannot remember the name of this company. I think that this is the best way for you to proceed.

 

[jackbak]

Hi tbow, you said you have just paid off your debts which indicates you have the ability to save. If I were you I would wait until I'd saved up the deposit and then buy something, with the market going down/sideways now's a great time to be saving.

The other upside of this option is you get to buy the house you want to live in, not just a house that someone is prepared to sell to you on certain conditions and probably at an inflated price.

Good luck!