Browse Tag

Buying a House Without a Mortgage

Buying a House Without a Mortgage Or Winning the Lottery

This has contributed to the repossession of an increasing number of properties, an issue that could well continue due to the reliance on a financial system that everyone has become used to. Therefore, changing times calls for changing the way people do business.Do you want to learn more? -visit their website

That’s where new and imaginative ways to buy and sell property are beginning to emerge. One of them, called an instalment contract, is a prolonged sale that requires the buyer to move to their new home at the time of contract exchange, and not when the legal title changes hands at the time of completion.

Typically, with the buyer only having to apply for a mortgage when they take title, with an instalment arrangement that does not arise until several years down the line. In between, rather than repayments to a bank, the buyer makes “term payments to the seller. In fact, without ever being classed as a “mortgage,” the look and feel of these payments will mirror that of a bank mortgage.

In addition, there has been an emergence over the last few years of what are called option agreements whereby a “tenant-buyer” can rent and later buy their future home at the same time. These forms of agreements are a precursor to the use of a standard sales contract to later sell the property.

Yet, they don’t all want to rent and then buy. Experience in countries like Australia and the United States, where this form of selling originated, has shown that if given the opportunity, individuals with a higher degree of personal and financial security would choose to purchase. These would-be borrowers are also very capable of reaching bank qualification status over time and with a payment background behind them with items like inadequate deposit and residency status in the US being a few reasons for not lending.

The tenants also make concurrent purchase instalments in addition to their monthly rent, which goes towards their later purchase if they wish to buy, compared with a “purchase option.” If the tenants change their mind, then they also forgo the purchase premiums that covered the terms of purchase in the contract. The sum of financial investment is also typically not as high as in an instalment contract where the plan to buy is decided just like a regular sale.

The payment contract has been structured to satisfy the various financial and legal regulations in the United Kingdom so that there is no “credit” aspect to the agreement. As with a bank, what the buyer does is simply make a series of instalment payments without recourse to borrowed money. When the buyer avoids paying, the deal is broken, just unlike with a mortgage, there is no debt hanging over the buyer’s shoulders.