Lets look at examples to see how this actually works….
We have used 90% mortgages and no property appreciation to ensure our examples are reasonably conservative.
Case Study 1
| Purchase Price | €300,000 |
| Term | 3 years (36 months) |
| Rental Credit | €500 per month, €18,000 over the full term |
| Option Consideration/Deposit | €2995 |
| TOTAL CREDIT | €18,000 + €2,995 = €20,995 |
| Mortgage at closing | €270,000 (90% of Purchase Price) |
| Cash Required For closing | €30,000 – €20,995 = €9,005 |
At closing your solicitor will get 90% of the purchase price from your lender. In the traditional home-buying case, your solicitor would have expected the other 10% to come from a cheque from you. In this case he/she gets notification from the seller’s solicitor of a €20,995 credit towards your home. Your solicitor would need you to contribute another €9,005 to close the contract or you would need to get a mortgage for another €9,005 i.e. a 93% mortgage, which is certainly possible.
Case Study 2
| Purchase Price | €300,000 |
| Term | 3 years (36 months) |
| Rental Credit | €1000 per month, €36,000 over the full term |
| Option Consideration/deposit | €2995 |
| TOTAL CREDIT | €36,000 + €2,995 = €38,995 |
| Mortgage at closing | €270,000 (90% of Purchase Price) |
At closing your solicitor will get 90% of the purchase price from your lender. In the traditional home-buying case, he/she would have expected the other 10% to come from a cheque from you. In this case he/she gets notification from the seller’s solicitor of a €38,995 credit towards your home purchase. In fact in this case you have €8995 more than you need for deposit which means you can lower your mortgage to €300,000 - €38,995 = €261,005
