Q. I like the concept but how do I select my new home and how much can I spend?
- Great question – after we determine that you are a good candidate for Rent-to-Own, we will introduce you to a real estate agent that is familiar with the area and you can begin shopping for your new home. We will set a budget together based on a number of factors such as monthly lease budget, downpayment and eventual purchase price. These factors all go into helping you choose the right home for the right price.
Q. I like the idea of shopping MLS listings but I already have my eye on a particular house?
- No problem, providing the house you have your eyes on meets the criteria we discussed above, we will try to buy it for you and make it your own home!
Q. I have bad credit and have been turned down by banks – can I still Rent-to-Own?
- Yes – in fact most tenants we work with have credit issues that need time to heal. Perhaps you had a past bankruptcy or some debts that need to get repaid. Providing you have strong monthly income and the ability to repair your credit, we can likely get you in your dream home right away.
Q. I like your program but don’t have a downpayment – can I still qualify?
- We require a small purchase option downpayment for every property. Without this it will be extremely difficult to ensure your end purchase is successful. Have you tried looking to family members or investments for downpayment assistance?
Q. What Makes Someone A Good Rent to Own Candidate?
- Low or No Credit – If a potential buyer has been turned down by a bank because of credit problems a Rent-to-Own can work for them. However, it is important for the buyer to have a realistic plan to get their credit back on track. (We have a program designed specifically for this.)
- New to Canada – Another situation where a Rent-to-Own can be useful when a buyer is new to Canada. Often when new immigrants come to Canada qualifying for a mortgage can be difficult. A Rent-to-Own allows the new Canadian to get a foot on the property ladder earlier than would otherwise be possible.
- Newly Self-Employed – Buyers who have been self-employed for less than 2 years will find it difficult to qualify for a mortgage at a typical bank. Since most lenders require a history on your self-employment income a Rent-to-Own can give the self-employed buyer a chance to get their business going while still working towards homeownership.
Q. How long does it take to get into my new home?
- A typical transaction can take 6-12 weeks. It largely depends on the house you choose and the closing date negotiated with the vendor. Sometimes a house may be sitting empty and we can complete the transaction in under two weeks. Other times the vendor may already be living in the house and may require time to move out and find their new home.
Q. What sort of legal agreements are involved?
- A rent to own tranaction is typically governed by three legal agreements:
- Lease Agreement – a typical rental agreement outlining the conditions of the rental term and lease payments.
- Occupancy Agreement – outlines the responsbilities of the tenant and owner.
- Option to Purchase – outlines the final purchase price and closing details (typically 36 months from start of rental term)
- As with any legal transaction, we encourage you to review the documents with your lawyer.
Q. What happens if we do not buy the house at the end of 3 years?
- We hope by choosing your own home that this will indeed be your eventual home. However, sometimes life happens and situations change. We deal with this on a case by case basis, but normally given enough notice, we will allow you move on. You will forfeit any rent credits and purchase option deposit as a result.
Q. Can I make improvements to the house?
- Yes! We ask that you consult us before any major improvements however making improvements is a great way to add value to your new home.
Q. What does an example transaction look like?
- Lets take another look at the sample Ajax home we looked at in the “How it Works” section:
Example: 275,000k Semi in Ajax
- Three year lease term
- Monthly lease payment of $2100 (includes property tax, tenant covers utils, contents insurance, maintenance)
- Monthly credit towards final purchase of $350 (Total of $12,600 by the end of year 3)
- Initial Deposit of $9,000
- Option to purchase at end of Year 3 – $324,000 + typical closing costs
- Combined credits of $9,000 and $12,600 go towards eventual purchase (representing over 6%)
During the three year lease term, the tenant works with a credit specialist or mortgage broker to ensure they are able to qualify for a mortgage at the end of the three year term.
