REPORTER: David Richardson

With the mortgage belt already at bursting point, there are bold new ways of getting into the real estate market. Like hundreds of thousands, Grant never believed he could own his own home, but he is one of an increasing number of people turning to new schemes to get onto the real estate merry-go-round.

To buy into his first home, he's signed onto a rent to buy program. "The house was valued at $390, 000 and the deposit was $3,000. We're paying $600 a week and it's just great", he said. "Two things I need to know. How much deposit you're got to play with and what your weekly income is", said Troy Baldy, Managing Director of Rent-to-Own.

Rent-to-Own like the Radio Rentals of real estate -- you provide a small deposit, sign a contract for 30-years, then pay rent for the life of the loan or until you can refinance and buy the property outright. "Our deposits are normally $10,000, with the first home owners grant that gives you $7,000, so you only have to come up with three thousand dollars. Then we'll work out a weekly payment that's suitable for you and the investor and you can move into your new homes in as little as nine days", Troy said.

The homes are provided by investors, or by the Rent-to-Own company. Most of the homes smaller, cheaper fibro and weatherboard homes. It's clearly a scheme aimed at people unable to get bank loans but it does cost a bit more. "We charge between half a percent and two percent more depending on the deal, but ballpark 7.95% would be the average rate", Troy said.

Real estate watchdog and author Neil Jenman worries these new schemes are nothing but traps for people who simply can't afford to buy a house. "Here's the biggest clue of all -- if the bank won't lend the people the money to buy a house, then surely paying more than, the bank would charge is dangerous" he said.

For tens of thousands of Australians, home ownership remains a pipe dream. High rents make saving for a deposit almost impossible, so real estate authorities believe these new schemes will break that Catch -22. "In a climate when housing markets are on the climb, Option-to-Buy allows the consumer to enter the home loan market today", said CEO, Michael Scott.

The scheme is called Option-to-Buy and it's effectively a partnership between an investment company and the home owner. The scheme is like putting a lay-by on a house and is aimed at the middle to high income earners. "Consumers pay fortnightly option payment, a portion of which is put aside to allow them to establish a 20% deposit over a 5, 6 or 7 year period", Michael said.

That deposit can then be used to get a regular mortgage with a bank and the investment company takes an agreed cut in any increase in the value of the property "There are many complex products on the market and consumers should be aware of all the risks and benefits of those products", said Jerrod Brody from the Consumer Action Law Centre. "Option to buy is an arrangement where consumers entering into terms of a mortgage in effect which is a long settlement period of 5 to 7 years. That could mean that for that period they're not protected by tenancy legislation although they're effectively renting their own home", he added.

Option-to-Buy plans to open in all states in Australia.

Rent-to-Own has already grabbed 28 customers and with houses becoming almost impossible to buy, more schemes like these will crop up in the months to come.

For further information on:

Rent2Buy, visit their website at: or call 0414 236 263

Option 2 Buy visit their website at: