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Buy-now-pay-later innovation


Buy-now-pay-later innovation

A rent-to-own initiative gives renters an opportunity to get a foot onto the property ladder.

Affordability and the drying up of the Bank of Mum and Dad is making it tough for first homebuyers, but there is now a unique savings option that has come onto the market.

OwnHome targets renters who are struggling with saving for a home deposit but who can afford regular mortgage repayments.

It has received a tick of approval from the Commonwealth Bank of Australia, which earlier this month announced a minority investment in this rent-to-own start-up.

“Approved, credit-worthy customers can move into their own home without the need for a deposit by paying an upfront fee and making monthly payments that build their deposit over time,” a CBA announcement stated.

There is a quite a bit of detail which needs careful reading around how OwnHome works for first homebuyers. Fundamentally, it offers clients the ability to move into a home immediately without the 10 to 20 per cent deposit that is traditionally required.

For successful applicants, OwnHome will buy a home ‘today’ and handle the deposit and stamp duty. The client pays an initial 1.5 per cent starter fee and puts in an additional one per cent purchase offset. The client has the ability to purchase the property at any time from the end of year three to the end of year seven from OwnHome at a pre-agreed price.

“By making simple monthly payments, you build your purchase offset in your home every single month. Each year, you build your purchase offset equal to 2.5 per cent of your home value,” OwnHome states on its website.

REIQ chief executive officer Antonia Mercorella says the organisation welcomes innovation and out-of-the box thinking, but she has a word of caution about how the OwnHome contract works and about reading the fine print. “With any scheme like this you have to be very careful,” she says.

“Before you enter into this sort of arrangement you would want to seek legal advice about what kind of security it gives you. People need to go in with eyes wide open, understanding that it’s not home ownership. You don’t end up on the title.

“You are effectively renting it with an option to buy it later at an agreed price,” she adds.

OwnHome has more than 3500 applicants on its waitlist. It plans to purchase 200 homes for approved clients over the next two years.


Tracey Johnstone has worked as a Journalist for over 15 years. She started as a sailing writer and working on international events both in Australia and overseas. For several years Tracey was a feature writer for a national Seniors newspaper before bringing her experience in buying, selling building and renovating Coast property to MWP in 2019.

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