Advantages and disadvantages of rent-to-own

In the event you find buying a new home unaffordable because of its exorbitant cost, you may alternatively scout out a seller who offers you a rent-to-own mortgage proposal. This unique form of a contract permits you to utilize a portion of your lease payment as a remittance towards the purchase of the house.

The agreement entitles you to buy the property after the completion of the rent-to-own tenure, which is for a specified period of few months to few years or walk away in case you do not like the house much.

Does this concept sound interesting?

Here we list some of the advantages and disadvantages that you should know before opting for a rent-to-own mortgage contract.


  • A rent-to-own property is a definitive alternative for purchasers or tenants who are ineligible for home loans because of their poor credit ratings. A rent-to-own mortgage gives you the opportunity and time for repairing this damaged credit. You can utilize your rent-stay period to settle on the finances for paying down the debt. This, in turn, will help you to rectify and improve your credit scores.
  • If the home does not appeal to you, you need not have to buy it. This flexible attribute of the rent-to-own contract is a desirable option. You get some time to test the home before you make up your mind whether to purchase it or leave it at the end of the agreement.
  • In case, you are at a loss in buying a home, first by renting it, sooner or later you become the homeowner when the contract terminates. This helps you in saving money to settle the down payment for the house. Alternatively, you can utilize the capital to purchase a different home altogether, in the event you decide to walk away once the contract ends.
  • Rent-to-own schemes can prove to be the ideal choice if you prefer a wait and watch the game. You get an opportunity to tune yourself to the market condition. If the property prices are high, you can continue staying on rent. Later on, when the prices fall and stabilise, you can look forward to buying a property. Therefore, this arrangement offers you with sufficient flexibility to choose your perfect home.


  • Initially, a rent-to-own can be an expensive proposition because, in addition to the monthly rent, you are obliged to spend an additional amount of capital towards rendering the down payment.
  • You can end up in getting embroiled in unwelcome legal troubles in case you indulge in the breaching and violation of a rent-to-own contract. Also, if you skip a payment or do not adequately maintain the property, you run the risk of getting evicted from your home as per the contractual terms, and all your rent-to-own money will be forfeited.
  • The contract specifies not just a fixed and confirmed selling price of the home but also dictates you to pay a non-refundable deposit to the homeowner. Therefore as a tenant, when you wish to buy the apartment at a reasonably affordable price, later on, owing to a probable drop in the property prices, you will experience a disappointment as you are legally bound to pay only the pre-decided amount.
  • Once the rent-to-own contract ends, if you decide not to buy the house, it means that all the money you spent eventually went into paying the rents only. Then you could have opted for a smaller place with a lesser rent in the beginning just, and used your extra savings towards making a down payment for purchasing another house.