Standard Bank recently piloted a rent-to-buy housing model in the affordable home segment, that would greatly assist clients with bad credit to secure home loan finance.
The product was tested with about 100 clients and was targeted to toward clients with impaired credit records in the Affordable Housing segment.
Affordable housing segment covered those who earn between R3 500 and R16 000 and properties of up to R500 000.
Clients would pay between 12-18 months rent, but it would be as if they were paying a bond.
This would help the bank to gauge whether the homeowner who be able to meet the monthly mortgage repayments, there by reducing their lending risk.
Although this program is open to a limited number of clients, there are other companies offering similar rent-to-own properties.
There are menu benefits to Rent To Own Houses:
1) It gives clients who are not able to qualify for a home loan, the chance to get their foot into the property market and become a homeowner.
2) It greatly reduces the risk off the banks, who are able to determine whether you’re able to repay the bond based on your record of pay your rent every month.
3) The rental payments you make every month, help to contribute towards your deposit for a bond.