Is rent to own a viable option?
I personally never liked the idea of rent to own (also known as lease option or lease buyback) in the past and have discouraged them at times. I felt it was an expensive and fairly risky proposition for people to get into a place that they don’t qualify for, and to an extent, I was correct. However, it doesn’t necessarily mean it is a bad solution for everyone.
Since the Government of Canada has been continually making it more and more difficult to obtain insured (and conventional) financing to purchase a home and the market doesn’t allow for self-insured alternative lending at the moment, there are alternatives that will help people to get ahead. For some, rent to own is a viable option.
How Does Rent To Own Work?
- -want to buy a home
- -are renting right now
- -make a good income and have less than 20% down (or 15%)
- -have had a credit history that prevents you from qualifying for prime financing
- -need some time to fix your credit in order to qualify for mortgage financing
then a rent to own program might be perfect for you.
In a rent to own program, you sign a lease agreement for a specified time period from 2-5 years. There is also then a purchase option that is provided to purchase a price at an agreed upon amount, which typically is higher depending on the length of the lease. You provide a down-payment at the beginning of the lease and when you make a rent payment, part of the rent goes towards the down-payment when you decide to purchase.
During the lease term, we work with you to try and help you to repair your credit to help ensure you can qualify for a mortgage by the end of the lease term. As you are purchasing the property, you could then qualify to purchase with as little as 5% down!
Can I Choose The Property I Want To Rent To Own?
Absolutely. We can help you with any property that is on the market. The only provision is that you need to be able to qualify for financing on it by the end of the lease term.
This is just a brief overview of how the plan works. I would first try to find any way possible for you to obtain mortgage financing, as it is still a much better option for people than rent to own. In order to determine if this is right for your individual circumstances and how we can help you, please contact me and I will be pleased to assist you.