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Your rent can now buy ANY Western Cape home priced R800k to R1,2m

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Saving up for a home loan deposit while renting can be a big challenge for many South Africans. Tenants who pay on time and in full may feel they do not have wiggle room in their budget to set aside some money each month to go towards a deposit; this could be because their finances are really tight, or they have not yet set a home price target and do not know how much to save or how long they need to give themselves to bank a sizeable enough deposit.

Western Cape prospective home buyers who have either had their home buying aspirations dashed by their bond finance application being rejected or who are battling to save up for a deposit while renting can now qualify for a home loan through the Rent2buy instalment sale concept.

“This opportunity is available as a pilot project for buyers and properties in the Western Cape, and in the price range between R800,000 to R1,2m,” says Rent2buy founder, Meyer de Waal, who notes that the financier will buy the property on behalf of the homeowner, provide the finance and will take transfer. “The Rent2buy homeowner (prospective buyer) will then go through a credit rating and affordability analysis to ensure that there is a very good prospect that within a period of three years, the Rent2buy homeowner will qualify for the home loan.”

Enforced savingmoney attraction

This is made possible by having built-in savings included in the rental amount over the three-year term. But should the Rent2buy participant breach contract by failing to pay their rental, they forfeit all savings.

This is why applicants are screened and need to already have a deposit of 5.4% of the home’s purchase price to contribute. To put this into context, in Q2 2017 the average purchase price for a home was R1,2m, according to bond originator, ooba’s statistics. The average deposit paid to secure finance was 17.9% (or R214,271).

The Rent2buy option, therefore, means applicants wanting to purchase a R1,2m home, need only R64,800 upfront to qualify – this is a saving of R149,471!

“To commence with an application, we will require the usual documentation for a home loan application: Copy of your ID, proof of income, complete budget of monthly income vs expenses and latest 3 months’ bank statements,” says de Waal. “If you are self-employed, we will provide the documents required.

“If not already registered, one can fast-track the application process and register on the online Rent2buy platform and complete your personal information, upload your payslip and FICA records, and do an online credit check and affordability analysis. If a manual analysis is done, the fee will be R750 per individual, and R850 per couple.

“During the Rent2buy period, the Rent2buy homeowner will pay a monthly rental, and a portion of the rental will be used as a down payment towards the purchase price, plus a monthly R150 Rent2buy administration fee. The full terms and conditions will be provided and a breakdown of the payments to be done.”

Previously, a Rent2buy buyer was restricted to purchasing from a Rent2buy seller, but with Rent2buy finance now available, a prequalified Rent2buy buyer will be able to purchase any property in the price range of R800,000 to R1,2m.

De Waal notes that each transaction will be assessed individually.

What it looks like on paperdoing the calculations

Property value: R780,000

Tenant contribution: R22,985 (which is the estimated reimbursement for transfer costs and sundry fees of R5,985)

Option fee (refundable): R22,985

Total tenant outlay: R42,835 (5.49%)

Rent2buy term: 36 months

First month’s rental: R9,925

Savings included in rental: R2,191.71 per month for 36 months

Rental also includes Rent2buy fee of R150 per month and tenant insurance

Option price escalation: Prime minus 3% (currently 7.25%) per annum

Rental escalation: 7% per annum

Total purchase price at end: R986,268.93 incl VAT (assuming Prime = 10.25%)

Total savings: R101,886.51 (8% of option price)

Refunded option fee: R22,985

Total deposit available to tenant R (10.33%)

Financier pays outgoing transfer costs.

No transfer duty on option price when exercised (VAT included) – this is a transfer duty saving

Want in?

To apply and get more information on the terms and conditions, first register on the Rent2buy database and then follow the easy steps for a credit and affordability analysis.

If you live outside the Western Cape, you are welcome to register as well, as Rent2buy plans to expand to other provinces in the near future, based on the success of the pilot project


David A Steynberg, managing editor and director of HomeTimes, has more than 10 years of experience as both a journalist and editor, having headed up Business Day’s HomeFront supplement, SAPOA’s range of four printed titles, digimags Asset in Africa and the South African Planning Institute’s official title, Planning Africa, as well as B2B titles, Building Africa and Water, Sewage & Effluent magazines. He began his career at Farmer’s Weekly magazine before moving on to People Magazine where he was awarded two Excellence Awards for Best Real Life feature as well as Writer of the Year runner-up. He is also a past fellow of the International Women’s Media Foundation.

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  • Gilbert April 10th October 2017

    Hi can i buy house after house sold on auction?