subject: How Property Owners Can Get On The Housing Ladder Even Without A Mortgage [print this page] About three or four years ago, it was quite easy to obtain a bank mortgage. Lenders were happy to give you upto 105% mortgages which meant you needed very little, if any, capital to buy your own home. Because of this, more people than ever were able to become homeowners. Today, this is no longer a reality.
The problem is that lenders now are unwilling to loan to people without large deposits or who have a low credit score. Most require a minimum of 20% deposit. The idea is this - if you put 20% into your home, you are less likely to walk away from the mortgage or default on it. Therefore, this deposit adds a layer of security to the lender's pockets.
However, if you do not have the sizable amount of money to put down, you can still buy a home, if you know what to look for.
Consider Lease Options
A Lease Option allows you to lease (rent) a property for a set time and then to have the Option to purchase the property at some later date, which is specified. In working in this manner, individuals have the ability to have the benefits of a rental property for some time, until they decide to purchase the property at a later time. While you will be required to pay a deposit to buy this Lease Option, it is going to be far lower than the payment you would need to make to a bank or other lender.
The key thing to consider about a Lease Option is its flexibility. Private (Seller) Finance is much easier to come by than Bank finance in the current climate. More so, you can decide at the end of the Lease that you need more time or that you do not want to buy the property. In this situation, you have time to save up to buy the home and be in a position to get a mortgage, if you would like to.
Consider Installment Contracts
If you know that you want to buy the property but you are unable to come up with enough for the bank's mortgage deposit requirement, another solution for you is to consider an Installment Contract.
What this means is that the owner (seller) becomes your bank and provides you with a private mortgage. You will come to an agreement about deposits and monthly payments and make monthly payments until you have purchased the property completely.
In either of these situations, you can count on having the ability to purchase a home without the 20% down that most banks now require. Further, you can count on finding opportunities like this with all types of homes, in all areas of the country.
So that's the secret - the opportunity to get into the home you want without paying a lot of money for it. It's really that simple.
