Is rent-to-own cheaper than a mortgage each week?
It depends on the home value and the interest rate, so put a price in and compare the two totals. The rent-to-own week includes a contribution that builds your deposit; the mortgage week includes principal that builds equity. Rates, insurance and maintenance sit only with an owner. Real weekly figures are on every listing of rent-to-own homes.
Look at the two totals first, then at where the money goes. Under rent-to-buy the contribution is building your deposit; under a mortgage the principal part of each repayment is building your equity. Rates, insurance and maintenance are an owner's costs, so they sit only on the mortgage side — edit them if your numbers are different.
What does the weekly cost calculator assume?
- Market rent is 4.5% of the home value a year for a house and 5% for an apartment, divided into weeks.
- The contribution is 50% of the first year's market rent, fixed for the term. The support fee is $33 a week.
- The mortgage is principal and interest over 30 years at 6.0%, indicative only.
- Council rates $3,000 a year, home insurance $2,200 a year and maintenance 1% of the home value a year — all editable.
- Rent growth is capped at 4% a year under the program.
Frequently asked questions
Market rent, a fixed contribution equal to 50% of the first year's rent, and a support fee of $33 a week. The contribution is credited towards your purchase price when you buy.