Do you want to live in a country where housing is affordable?
Do you want a safe place to invest your savings?
Do you want to make it difficult for Real Estate speculators?
Do you want to see fewer people without homes?
Do you want to pay less to buy a home?
If you want any of these then please support Rent and Buy.
Rent and Buy is a new type of loan. If you can afford to rent a home you can afford to buy it.
Most people buy a home by borrowing money from a bank. Savers put money into banks who then lend it to home buyers. Borrowers use the money to buy the house from an owner and repay the bank loan. To make sure they repay the loan the bank has a mortgage on the house.
With Rent and Buy a person buys money from Savers not a bank. Banks, Governments and other organisations can assist Renters borrow from Savers. Or a Renter can borrow from a Saver. Instead of the bank holding a mortgage on the home the Saver holds the mortgage.
Rent and Buy removes the cost of inflation and the cost of interest on interest. Rent and Buy financing and operating costs are about half the cost of bank loans.
Renters and Savers share the savings.
If you support Rent and Buy we will ask banks, governments and others to offer Rent and Buy loans.
To support Rent and Buy visit https://goo.gl/5MKjIh
How it works
An example: If you have a $300,000 loan over 20 years at 4.5% Rent and Buy will save you $24,000. If the interest rate is 6% you will save $102,000.
Another example: For Savers a $300,000 Rent and Buy loan held for 20 years will return an extra $62,000 over bank interest. This assumes an inflation rate of 2% and a bank interest rate of 6%. With regular loans this money often goes to finance speculators with accounts in overseas tax havens.
Renters must live in the home they are buying and must have title to the home. Savers are people who have savings they want to invest. They purchase mortgages tied to a given home. The Renter builds equity in the home with a deposit and with their regular repayments. If the home is sold then both the mortgage holders and the Renter share in any Capital Gain or Loss. Typically a loan has many Savers. Often there are many Renters like a couple with the title in their joint names.
Each Loan is tied to a particular property. A holder of a mortgage can sell their share of the loan quickly and easily to another Saver at any time. Most Savers will receive their money back as an annuity.
The contracts for borrowing and lending are almost the same as existing contracts. The main difference is that a mortgage may have many owners all with equal rights. For tax and accounting purposes Rent and Buy loans look like secured loans. Savers leave the interest with Rent and Buy and the interest is lent to new Renters.
If you are a Renter you pay 5% or more of the total value of the home each year. At 5% it will take you a maximum of 34 years to buy your home without a deposit. The 5% can be lower if you have significant equity in the home. You can pay off the loan and accrued rent at any time for no penalty. The home is revalued each 12 months. If you cannot pay your rent you vacate the home so someone else can Rent and Buy it. The new person living in the home gets the title to the property. You now become a Saver and own a part of the Mortgage on your ex home. This means if you have to sell you do not lose the equity you have built up in the property. You can use your equity as a deposit on your new home or you can sell your part of the Mortgage to another Saver..
Rent and Buy does not own any property. All unlent Savings are held in Trust Accounts. Financial Institutions sell Rent and Buy services and handle the day to day customer questions and queries. Rent and Buy software matches Renters with Savers and handles the Mortgages and Payments. Rent and Buy charges a fee each time rent is paid or Savings are deposited. Financial institutions charge fees for selling the service, arranging the legal documents and for handling customer questions and queries.
A person can be both a Renter and a Saver. A person can borrow money to buy a house while allowing others to use their savings or super to buy a different house.
Rent and Buy provides low cost loans. This happens because we have invented a way to reduce the risk of funding. We have also invented a way to provide a secure private system that renters, savers and operators can understand and monitor. For the technical minded Rent and Buy is a distributed ledger of all the transactions involving the home. Each Renter and each Saver has 24 hour access to their accounts.
Here are some typical situations where you might use Rent and Buy
- If you wish to own your own home then Rent and Buy is low cost and low deposit. The rental rate is 5% annually of the value of the Rent and Buy home.
- If you own a dwelling and want it to sell it and get an inflation adjusted 7% fixed income on the value of your property then Rent and Buy is an option.
- If you have an existing loan switching to Rent and Buy will almost always reduce your total payments.
- If you own a home and want to live off money you have saved buying the home then Reverse Rent and Buy is an option.
- If you have a self managed super fund and would like to invest in property then Rent and Buy Mortgages is an option.
- If you have savings and want to get an inflation adjusted 7% fixed income on the savings then Rent and Buy Mortgages are an option.
If you are a Renter you can calculate your yearly rent as 5% of the value of your home.
If you are a Saver you can calculate yearly earnings as 7% of the inflation adjusted value of the amount of money invested.
The length of time to pay back a loan is calculated as.
V= Value of your home.
R = Repayments = V times 5%
L= Value of your loan.
X = L divided by R
Years to repay the loan = X + (X * L * 7%) / R / 2
A $300,000 loan on a property of value $1,000,000 gives
V = 1,000,000
R = 50,000
L = 300,000
X = 300,000 / 50,000 = 6
Years = 6 + (6 * 300,000 * 7%) / 50,000 / 2 = 6 + 1.26 = 7.26
This blog post looks a little more deeply into the theory behind this new approach to Renting and Saving.