What constitues a deposit ?

Jinto

I have posted in the house buying forum about a deal a property developer has offered. Basically he is offering to rent a property for a number of years with the option to buy at the end at which point ALL of the rent monies will be credited back against the sale.

Obviously the attraction of this would be that this return of rent would fund the deposit required for the mortgage.

My question is, how should this be done to make it acceptable to the mortgage lender. For example would it be better to get the cash back or would a reduction in purchase price of the equivalent amount be the same?
What are the implications of either of these as far as the lender is concerned?

miss_undastood

I'm not an expert, however I don't think that that would count as a deposit - it would be a reduction in sale price, so if you paid £3000 in rent, he'd knock £3000 off of the sale price, you've not paid a £3000 deposit.

I would get a legal contract drawn up though, to make sure that he doesn't change his mind or change the terms of the deal.

Jinto

OK this is a bit off the wall, just trying to be lateral. What if the developer signed over a % of the equity each year for the rental period and then at the end of the agreement agreed to buy back that equity thus providing a cash sum which could then be used as a deposit for the purchase of the house.