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Rent with option to buy

What is rent with option to buy?

If you do not know how to rent with an option to purchase, read carefully all the points detailed below, if you are like the vast majority and need a mortgage to finance the purchase of a new property, you must have a large amount of savings for the initial payment, in At best, at least 30% of the value of the home must be saved. Without these savings, you will not be able to buy in the traditional way.

However, there is an alternative: a rental agreement with option to purchase, in which you rent a house for a certain period of time, with the option to buy it before the lease expires. Rental contracts with a purchase option consist of a standard lease contract linked to a purchase option. At the end of the term, you will have the right to buy it for an agreed price and from which the rental income paid so far will be deducted, totally or partially.

Here you have a summary of what you should pay attention to and how the rent with option to purchase works. It is a riskier process than simply renting, but it will help you to buy the home.

Keys to consider

  • As a general rule, an advance amount called a non-refundable option premium is delivered.
  • What percentage of monthly payments discount the final price.
  • Who pays community fees, taxes and supplies?
  • Request the remaining financing well in advance so as not to lose the option to purchase

Advance payments non-refundable

In a lease with purchase option, you (as a buyer) pay the seller an initial agreed amount that will be deducted from the purchase value. Usually this amount is between 10% and 20% of the value of the property, this amount is called an option premium and is not refundable. Therefore you must be sure that you can exercise the right to purchase before the last month of the contract by certified notification and with acknowledgment of receipt by the lessee party since otherwise everything paid will remain in the hands of the owner (lessor) without option to claim.

How much do you discount my monthly payments?

It is important to know that part of each payment is applied to the final purchase price. In the contract it must be established that percentage of the monthly payments will be deducted from the final price, usually 50% is usually deducted but sometimes 100% is achieved, therefore, in this case all the monthly payments will be deducted from the final purchase price at the time of exercising the option.

Maintenance of the rental home with option to purchase

Depending on the terms of the contract, you may be responsible for maintaining the property and paying for repairs. Because sellers are ultimately responsible for community expenses, taxes and supplies (after all, it is still their home), they generally choose to cover these expenses by establishing in the contract that the expenses be borne by and charged to the leasing party.

Ensure that maintenance and repair requirements are clearly stated in the contract.

Last step: Buy the property

What happens when the contract ends depends in part on the type of agreement you signed. If you have a purchase option contract and wish to exercise the option, you will probably need to obtain a mortgage (or other financing) to pay the seller the remaining amount, so you should be especially careful not to exceed the deadlines and ask for financing on time Since the bank usually takes between 2 and 3 months to grant the mortgage loan, even on some occasions it may take longer.

If you do not exercise the option within the established time, you will lose the money delivered to date.


In short, a rent with option to buy can be a good option to buy a property if you do not have enough savings and need time. But take special care and attention on the key points because if it goes wrong you will lose the money delivered and the option to buy.

If you have questions and would like more information on how to make the rental with option to buy in Tenerife contact us and we will help you in every way possible.

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