properti Switzerland

Login

Rent-To-Own: An Alternative to the Classic Mortgage

Beratung mit properti Immobilienmaklerin und Paar gemeinsam am Tisch
* This is a digital voice. Some texts may not be pronounced perfectly.

The dream of owning a home remains a desirable goal for many people. However, people often lack the financial means to purchase a property. In Switzerland, there is a financing option that offers a solution: rent-to-own. This method, which is still not very widespread in Switzerland, offers the possibility of renting a property first and buying it later.


What is Rent-To-Own?


Rent-to-own is an alternative financing method for prospective homeowners. In contrast to conventional rental agreements , a rent-to-own agreement includes an option to purchase the property at a later date. This type of financing allows tenants to use monthly payments as a down payment for the later purchase of the property . This means that even people who do not have enough equity can realize their dream of owning their own home.


Rent-to-own vs. mortgage


A classic mortgage loan usually requires a down payment of at least 20 percent of the purchase price of the property. This represents a considerable financial burden for many potential buyers. In comparison, rent-to-own offers a lower entry barrier, as the monthly rent payments already count as part of the down payment for the future purchase.


In a rent-to-own agreement, the rent remains constant throughout the contract period and is not adjusted to the reference interest rate. At the end of the rental period, the property is purchased , with a balance to be paid, similar to a car lease. This remaining amount can either be covered by savings or by additional financing.


Do you want to know what your property is worth? Calculate it now easily and for free.

Calculate market value now


"Diagram shows rent-to-own process: 1. buyer and seller agree on the purchase price and rent. 2. notarization of the hire-purchase agreement. 3. buyer makes a down payment for the property. 4. property is paid off monthly via the rent. 5. the agreed residual amount is due at the end of the term. 6. the property is the full property of the buyer. 7. entry in the land register."

Advantages and Challenges of Rent-To-Own


Advantages:


  1. Easier access to property: A installment plan enables people who do not currently have enough equity or a sufficient credit rating to purchase a property.
  2. Use of the property during the purchase phase: Buyers can use and live in the property immediately while they pay off the purchase price.
  3. Planning security: Fixed rent payments offer financial planning security throughout the contract period. Since the rent is not tied to the reference interest rate, monthly expenses remain constant, facilitating long-term budget planning.
  4. Accumulation of equity: Through the monthly rental payments, equity is continuously saved, which is offset against the purchase. This means that every franc paid ultimately flows into the ownership of the property and is not “lost” as with a normal tenancy.
  5. Right of first refusal: Many rent-to-own contracts grant the tenant a right of first refusal, meaning they can purchase the property under the conditions stipulated in the contract before it is offered to other potential buyers.

Challenges:


  1. Higher monthly charge: The monthly rent in a rent-to-own agreement is usually above market value, as it includes both rental and purchase components and acts as an installment payment.
  2. Contractual commitment: Rent-to-own requires a long-term contractual commitment and firm planning. If the tenant’s financial situation deteriorates during the term of the contract, this may lead to difficulties in continuing to make the agreed payments.
  3. Remaining amount at the time of purchase: At the end of the rental period, the remaining balance must be financed, which can represent a further financial burden. This residual amount can be considerable and requires either sufficient savings or the possibility of taking out further financing.
  4. Risk of loss in the event of contract termination: If the rent-to-own contract is terminated prematurely, there is a risk that already paid amounts may be lost or not fully credited. This represents a financial risk for the tenant.
  5. Market risks: If the real estate market develops negatively during the term of the contract, this can affect the value of the property. This means that the tenant may have to pay a higher price at the end of the rental period than the current market value of the property.

Conclusion


Rent-to-own offers an interesting alternative to the classic mortgage and is particularly aimed at individuals who lack sufficient capital. By allowing monthly rent payments to be used as a down payment, it makes the path to homeownership accessible to this target group as well. However, it should be noted that the monthly costs can be higher and a long-term contractual commitment is required.


Whether as a seller or buyer, rent-to-own provides a flexible solution that can enrich the real estate market and open new paths to homeownership.


Let experts guide you. We are here to assist you with any questions and provide non-binding advice. Schedule a consultation appointment directly or call us at: +41 44 244 32 00.

Schedule an appointment


All data are without guarantee. The information on these Internet pages has been carefully researched. Nevertheless, no liability can be assumed for the accuracy of the information provided.

More about the author

properti

Properti – we offer simple and understandable real estate expertise. Thanks to our many years of experience and focus on industry trends, we always have our finger on the pulse and can provide our clients with the most important information on real estate.

More articles

Questions? Arrange a free consultation now or give us a call:

Calculate real estate value

Find out the market value of your property free of charge using our online tool. You will receive an initial comprehensive analysis in just a few minutes.

The search for a new home begins now

Looking for a new property? We will be happy to do the search for you completely free of charge. Sit back and leave the work to us. It’s time-consuming and frustrating to search for the perfect home, so we make this process as stress-free as possible.

Current real estate knowledge

Our publications “Insights by properti” provide players in the real estate industry with up-to-date and useful information. True to our approach – the real estate market is complex, we make it easier to understand.

You can download our articles directly and free of charge.

Ihr Download:
Checkliste für den Umzug steht fast bereit!

Dank unserer hilfreichen Checkliste geht bei Ihrem Umzug nichts verloren.

DATA PROTECTION: We process your personal data in accordance with the Federal Act on Data Protection in order to process your enquiry. Further information on our handling of personal data, in particular on your rights as a data subject, can be found in our Privacy policy.

Sie haben uns vertraut

Aarau

4.2 | 5 Bewertungen

Basel

4.4 | 29 Bewertungen

Bern

4.3 | 30 Bewertungen

Burgdorf

5 | 18 Bewertungen

Luzern

4.2 | 5 Bewertungen

Lugano

0 Bewertungen

Muttenz

0 Bewertungen

Solothurn

4.4 | 14 Bewertungen

St. Gallen

3.9 | 18 Bewertungen

Waadt

0 Bewertungen

Zug

4.4 | 14 Bewertungen

Zürich

4.5 | 1034 Bewertungen

Sind Sie bereits unser Kunde? Teilen Sie uns Ihre Meinung mit und helfen Sie uns, unsere Immobiliendienstleistungen in der Schweiz zu verbessern.

Sie haben eine Frage?
Unsere Expert:innen freuen sich auf Ihren Anruf.

+41 44 578 90 15

You have trusted us

Aarau

4.2 | 5 Reviews

Basel

4.4 | 29 Reviews

Berne

4.3 | 30 Reviews

Burgdorf

5 | 18 Reviews

Lucerne

4.2 | 5 Reviews

Lugano

0 Reviews

Muttenz

0 Reviews

Solothurn

4.4 | 14 Reviews

St. Gallen

3.9 | 18 Reviews

Vaud

0 Reviews

Zug

4.4 | 14 Reviews

Zurich

4.5 | 1034 Reviews
Theme Version: 1.1.4