Option Fee Explained: What Your Down Payment Actually Does in a Rent-to-Own Deal

When people first look at a rent-to-own agreement, the option fee is usually the first thing that raises questions. It looks like a down payment, but it's not quite the same thing. It looks like a deposit, but it works differently. Here's a clear explanation of what it actually does and why it matters.

What Is the Option Fee?

The option fee is an upfront payment you make when you sign a rent-to-own agreement. At Bryan Estates, this is set at 10% of the purchase price across all current listings.

What you're buying with this payment is the option to purchase the property at the agreed price within the term of the agreement. It's not a deposit that sits in an account waiting to be returned. It's a payment that gets credited directly toward your purchase price from day one.

This is a key distinction. The money isn't held separately — it goes toward what you owe on the property immediately. You can see the option fee amounts on each listing at our rent-to-own properties page.

How It Differs from a Standard Rental Deposit

A standard rental deposit is a security payment. It protects the landlord against damage or non-payment and is returned at the end of the tenancy — minus any legitimate deductions. It builds you nothing and earns you nothing.

The option fee in a rent-to-own deal does the opposite. It's non-refundable in the traditional sense, but that's because it's not a deposit at all. It's a purchase contribution. The moment you pay it, that amount is subtracted from your outstanding balance.

On the Kohtla-Järve listing, for example, the option fee is €1,900. That €1,900 is applied to the purchase price immediately. Your financed amount is calculated after this credit, not before it.

A Practical Example with Real Numbers

The Loksa studio apartment has a purchase price of €36,000. The option fee is €3,600 (10%). Once you pay the option fee, the adjusted financed amount becomes €42,120, which accounts for the financing structure built into the agreement.

Your monthly payment of €234.00 is calculated on this financed amount. Of each monthly payment, €163.80 covers occupancy and €70.20 is your equity credit that keeps accumulating toward the purchase.

So on day one, your €3,600 option fee has already put you into the agreement with a real financial stake in the property. That's a very different position from handing over a deposit that you'll simply get back in two years.

Our mortgage calculator lets you model how the option fee and monthly payments combine over the full term.

What Happens to the Option Fee If You Don't Complete the Purchase?

This is the part buyers need to understand clearly before signing. Because the option fee is applied toward the purchase price and gives you the right — but not the obligation — to buy, it is generally not returned if you choose not to complete the purchase.

This is consistent across the industry. The option fee compensates the seller for taking the property off the open market and locking in the price for your benefit. If you walk away, that benefit is forfeited.

If you're concerned about what happens in different exit scenarios, the FAQ page gives a clear overview of how Bryan Estates handles early exits and what your options are.

Why 10% Is a Fair Starting Point

A 10% option fee is standard for a reason. It's meaningful enough to demonstrate genuine buyer commitment, but low enough that it doesn't create the same barrier as a traditional mortgage deposit.

Compare it to the Estonian bank mortgage market, where lenders typically expect 20-30% of the purchase price upfront before approving a loan. On a €37,000 property, that's between €7,400 and €11,100 in cash before you get a yes. The option fee route puts you into the property for €3,700.

If you want to understand how rent-to-own stacks up as an alternative to traditional financing, our rent-to-own Estonia overview lays out the comparison in detail.

Getting Started

The option fee is your first real step from renter to buyer. It's the moment the agreement becomes real and your path to ownership officially begins.

If you're ready to take that step, browse the current listings and see which property fits your budget and situation. Or contact the team directly if you want to talk through the numbers before committing.