How do spread the balance property deals work

Spread the Balance Property Deals — Frequently Asked Questions

1. How does it work without a mortgage?

Instead of borrowing money from a bank and paying interest for decades, you buy the property and pay the seller in monthly instalments over an agreed period. No interest, no mortgage.

2. What are these deals called?

These are known by various names in different countries, including:

Rent to Buy
Rent to Own
Lease Purchase
Deferred Sale and Purchase Agreement

3. How am I protected?

Your solicitor handles the legal work and prepares the contracts to protect your interests.

4. Are there credit checks?

No. You are not borrowing money, so credit checks are not required.

5. Can I use the property during the term?

Yes, absolutely!

6. Can I rent out the property during the term?

Yes, most buyers rent the property out to help cover the monthly instalments and even pay off the balance quicker.

7. What if I stop paying?

Just like a mortgage, it’s important to stay on track with payments. Missing consecutive payments can lead to the contract being cancelled, and you could lose what you have paid so far.

8. Can I sell the property during the term?

Yes! You can sell to a third-party buyer at any time. Your profit is the sales price minus the remaining balance owed to the seller.

9. Can I pay off the balance quicker?

Yes — and there are no penalties for early repayment!

10. How many properties can I buy this way?

There is no limit. Many investors use this method to build property portfolios.

11. What are the upfront costs?

You will pay an agency fee and legal fees, which vary depending on the property and country.

Example Calculations:

Example 1 — Spread the Balance Deal:

Property Price: €100,000
Term: 10 years (120 months)
Monthly payment: €833
Total paid: €100,000 (no interest)

Example 2 — With a mortgage (25 years at 5% interest):

Property Price: €100,000
Approx. total repayment: €175,000 over 25 years

Example 3 — Spread the Balance and Renting out the Property:

Property Price: €100,000
Monthly payment: £833
Rent income: £600/month
Difference out of pocket: £233/month
Over 10 years, that’s £27,960 paid out of pocket for a property initially worth £100,000 — plus rental and value appreciation!

Obviously with any property you need to factor in void periods, rent fluctuations, upkeep etc.