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Rental with purchase option, a good idea?For who?Advantages and disadvantages

In a context where real estate prices are climbing and borrowing conditions are increasingly difficult, rental with purchase option can be a good technique in order to bypass certain purchasing difficulties.

Also known as "rental-purchase", this type of understanding consists of a notarial contract between an owner-seller and a tenant-acquire.The agreement stipulates that the tenant-acquire will be able to buy the property he rents, generally after one to three years.

For the tenant-buyer, this type of transaction still requires a monetary intake.As soon as the agreement is signed, the seller requests a security deposit, the amount of which is often similar to a funding required by the banks, but which will be given to him when the end purchase if the tenant respected the conditionsof the contract.

According to Ghislain Larochelle, real estate columnist, this kind of agreement compares to the rental of a car, with the difference that a car is depreciated over time, while in general, real estate prices havetendency to increase.

On the buyer side, rental with purchase option is intended for people whose mortgage loan request has been refused, to those whose credit score is bad, or whose mortgage renewal is refused.

La location avec option d’achat, une bonne idée? Pour qui? Avantages et inconvénients

On the side of the sellers, this is for either people who have difficulty selling their house, or even investors who specifically buy a house for the tenant and sold him a few years later.

Rental with purchase option makes it possible to become the owner despite a refusal of financing from the bank.It also allows you to take advantage of the capital gain in real estate.Finally, it makes it possible to seal an advantageous agreement, as much for the seller as for the buyer.

However, for the tenant, the rent is higher than in the context of a standard rental.In addition, there is a risk of losing the security deposit if it leaves the agreement before the end of the term.

Before using this type of rental, Ghislain Larochelle advises to assess all the options available, since the rental with purchase option constitutes an option of last resort after a usual mortgage of a financial institution.He also advises to surround himself well in the process, in particular a lawyer specializing in real estate, notary, then to obtain references from the seller or the promoter before signing an agreement.

The figure of the week: 7000

This is the number of families who have experienced a bank resumption in the last 12 months.A large majority of people who have equity in their home could have taken advantage of the rental with option to buy to avoid losing their home.A research on the web is essential, Ghislain Larochelle advises to assess the rental-purchase before putting the keys.

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