How to Rent to Own

 

Frequently Asked Questions

What is Rent to Own or Lease to Own?

Rent to Own is a program designed for people who want to buy a home now and either is not yet ready to qualify for bank financing or prefer not to apply for mortgage financing right away.

How does Rent to Own work?

Our program is designed around your financial situation. A non-refundable deposit or down payment is required that is applied to the purchase price. You then rent your home and a portion of every rent payment is credited to your deposit or down payment. Typical rent periods are 1 to 3 years. During that time, when you are ready, you arrange bank financing and the property title is at that time transferred to you.

Can you show me one example?

3 Bedroom / 2 bath Home:
Purchase Price: $350,000
Initial Deposit: $ 9,000
Rent Payment: $ 1,655 ($355 per month rent credit added to Initial Deposit)
Rent Period 24 months

After 2 years:
Purchase Price: $350,000
5% Down payment $ 17,520 ($9,000 + $355 x 24 months)
95% Mortgage $332,480 (Bank Mortgage plus applicable insurance)
Mortgage Payment $1,763 (Example 5.2% rate, 35 year amortization)

What happens If I have credit problems?

Credit problems are okay: You will be approved on our Company Policy Rent to Own program, not the bank’s qualifications. We give you enough time during the rent period for you to repair your credit. We also have you work with a banker or a Mortgage Broker so you know the necessary steps to re-build your credit. Once your credit is back in good standing you apply for your own mortgage.

How much down payment is required?

Typical down payments are between 2% and 5%. The higher the easier it is for you to qualify.
Please have in mind that at closing between your rent credits and your initial deposit you have to have 5% of the purchase price. To qualify for mortgage financing you must have an additional 1.5% of the purchase price as required by Canada Housing and Mortgage Corporation.

How much of every rent payment adds to my down payment?

A portion of your monthly rent payments called rent credits, are credited towards your purchase price. Every property has a different rent credit. We make sure at closing between your initial down payment and your rent credit you have enough down payment (5% minimum) to purchase the home.

It is my purchase price guaranteed?

Your purchase price is established at the beginning of your rent to own term and it is guaranteed. During the rent to own program only you can buy the home for this guaranteed price. We cannot sell the home to any other person.

How long can I have my rent to own program?

The standard rent to own program is 12, 24 or 36 months. Other terms are available depending on your circumstances (example 48 months).

What happens if I do not want to buy the home?

If you decide not to buy the home you will forfeit your rent credits and your initial deposit or down payment. Please note that it is our requirement prior to you qualifying to our Rent to Own program that you review your financial situation with a mortgage broker or mortgage specialist to make sure you can qualify for financing before the end of the rental period.  This would be similar to buying pre-sale where you would give a developer a deposit to buy a property in ex. 1 year.

Is Rent to Own legal?

Yes, you would have the opportunity to review the contracts with your lawyer.

How to Rent to Own?

1. Find a Property where the seller understands and is willing to participate in the program
2. Understand and design a plan for you to be able to get mortgage financing in 1-3 years with a mortgage broker who understands this strategy
3. Draft a Rent to Own agreement
4. Seek legal counsel
5. Sign all paperwork
6. Move in
7. Implement and Monitor your Credit and Mortgage Plan
8. Pay always on time
9. 4 Months before the end of the agreement apply for a mortgage
10. Get financing and transfer the title of the property to your name
11.  The home is yours !