Conditions of hire purchase
In a typical lease agreement the rent buyer pays interest on the total amount of rent seller.
There is rent by a vendor appraisal and a deed to be made in respect of the lease agreement. The property remains the property until the entire purchase price has been paid. The risk of seizure, mortgage and bankruptcy are for the hire purchaser.
The monthly fee is divided into a part repayment and part interest.
If within the prescribed period, the full purchase price is paid, the rent seller benefits of the interest it has received, the property tax will no longer be accounted for and the maintenance costs are not accounted for.
If the rent buyer does not pay the full purchase price within the prescribed period, the rent buyer gets to keep the already paid interest and does not have to repay the rent buyer.
The rent buyer is obliged to maintain the plot in the same condition it was when he accepted it. Necessary repairs are covered by the rent buyer. Alterations, renovations or change of the structure of the plot and / or built upon may only occur with previously obtained written approval of the rental and are the sole responsibility of the rental buyer.
All the risk are for the buyer from the start of the agreement.
Property tax is payable by the purchaser lease, the rent seller will charge the buyer rent.
The rent seller will insure the secondary benefit of rent buyer against fire, storm and other damage and keep insured with an insurer designated by the seller rent
The rent buyer is required during the term of the lease contract life insurance, at least at death distributable insurance for a sum insured which must be at least at the start of the hire purchase price; rental vendor will be designated as primary beneficiary in the policy.
Any account of damages to be paid amounts owed by an insurer to the rental vendor under obligation for them to utilize the amount to be received in conjunction with the hire purchaser to repair the damage, the amount that remains is the rent buyer benefits by extra to pay off the purchase price.
As long as the lease price will not be paid in full, the written approval of rent seller prohibited without previously obtained the lease purchaser the plot and / or built upon, or any part thereof to any third party in any use or enjoyment (including (sub) lease) down to stand.
Rental Buyer is entitled to advance payment of one or more subsequent periods.
* Rent Seller’d already an indication of the monthly amount owed on the property tax burden to calculate this with the total monthly costs will be charged for rent buyer.
Purchase price NAFL. 375.000, –
Interest rate of 6% of the purchase price
Amount for redemption at the start NAFL. 1500
Some 24 months maturity
Interest per month NAFL. 1875 –
With an amount of NAFL. 1500, – per month, the debt will increase by NAFL. 375 – x 24 months = NAFL. 9000, -. Total amount payable by the purchaser NAFL after 24 months. 375.000, – + NAFL. 9000 – = NAFL. 384,000, –
The interest is deductible.
Types of three different scenarios, namely:
Deed of lease. Should notary as this is a registered property and in this deed a lot needs to be arranged. The deed must be properly regulated the consequences of failure to comply with the obligation to take at a given time. The property is in principle only pass after the last installment is paid.
It is now already delivered and the purchase price remains outstanding loan. As security for the performance of this loan (by seller to buyer) is a right of mortgage on the house. If it is not met, you can then foreclosing the mortgage right.
It is now prepared for a lease containing an option / obligation to purchase the home after a certain period (mutual option) from now to agree on terms. To non-fulfillment may possibly be a penalty attached. The advantage is that at present there are no necessary notarized deed (s) and making those costs are deferred until the time of exercise of the option / obligation. The disadvantage is that there is less certainty as it only concerns contractual obligations without direct business legal action.
The advantage of option one and two that you arrange everything immediately. The disadvantage is that you immediately have to pay any notary fees and transfer tax (while not 100% sure that the transaction actually goes). Option three is private and costs are only incurred in implementing the option. The costs (notary / transfer taxes, etc.) will be around the Nafl. 25,000 – lie.
