Rent2buy (R2B) Finance is a Plan B for a homebuyer who is almost, but not quite ready, to apply for a home loan to buy a property. If the buyers’ home loan was declined initially and but he has a reasonably good credit profile and at least 7% deposit (if buying from a private seller), 3 to 5% deposit available (if buying from a property developer) or 20% if a foreign buyer, and he lives in Bloemfontein, Gauteng or Cape Town, then he is able to start the process of applying to purchase through the Rent2buy Finance programme, says Meyer de Waal, director of MDW Inc, and co-founder of Attorney Realtor Hub.
The way it works is that Rent2buy Finance will buy the property on behalf of the homebuyer and will hold the property with a just a nominal amount added to the purchase price instead of a market related increase in price over the two years. Just before the expiration of the 24 month “lease”, the buyer can decide to convert the rental to an instalment sale and take transfer 15 to 20 years later, once he paid back the full purchase price and interest or apply for his home loan and take transfer as soon as possible after his loan is approved. He could, however, also choose to sell the property and keep the profit, but in this case certain terms and conditions would apply and would need to be discussed with the Rent2buy consultant.
The first step is to complete the Rent2buy Finance Rental application form (obtainable through by emailing firstname.lastname@example.org). With the form, the potential buyer must also submit a copy of his Identity Document, proof of income (if self-employed, the latest financial statements or a report from an auditor), the consent form for a TPN credit profile to be carried out (also obtainable through the email address above), and bank statements for three months.
A fee of R750 (for individuals) and R850 (for couples) is payable on application.
A Rent2buy Finance buyer can also start the process with a free online credit score through the Rent2buy Finance link.
Rent2buy, working with Rentmaster, will analyse the buyer’s credit profile, income, expenses and affordability and will issue a certificate with the monthly rental amount that he qualifies for. R2B will then convert the rental amount into a purchase amount and issue a formal R2B finance quotation, which provides a purchase price, what deposit is required, the interest rate payable, monthly rental amount, R2B option fee, and the end purchase price applicable after the rental term is up.
Once the buyer has a purchase price certificate, he has as much power as a cash buyer, provided he buys in the approved pilot project areas and within the required price range.
In addition, R2B provides a personal My Budget Fitness trainer to help buyers get ready for home ownership. This service ensures that buyers stay on track with their monthly account commitments (and not racking up further debt) as this affects their ability to pay off a home loan without struggling to meet payments each month.
“The advantage of buying a home in this way, rather than waiting until you have a larger deposit saved up or qualify for a higher home loan is that property prices will also go up in the meantime, which moves the benchmark. If you have a home that you want now, it is possible to buy through the R2B Finance company and during the Rent2buy 24 month rental period, the price of the home will not be increased by as much as the market-related price does,” said de Waal.