Rent to Own – Guide
Rent to Own Property Now Available
What Are The Benefits Of Your Rent To Own Program?
Lease to Own allows you to get out of a not so nice “rental property” and move into a place you can proudly call home right away.
At the same time you start saving enough money for your mortgage down payment with the goal to own this home over a predetermined period of time.
You don’t need to wait years and years to improve your credit history before you can qualify for a mortgage and move to a nice home.
Rent payments can be fixed for the life of the agreement, so you have a clear plan towards owning your home.
Instead of just paying rent you are working towards the purchase of the home you are living in. You start building equity in your home immediately.
You don’t need a large standard down payment to get into your dream home right away. A small amount is enough for having you moving into your new home.
We create a plan with you to accumulate the balance of the down payment.
The future option price is locked in so you will benefit from any property appreciation above the option price exercised.
Your new mortgage is generally easier to obtain when you exercise your option, especially when the property value is higher than the option price.
Plus, you also know, the work you do in your home will not be wasted when the lease is over.
Best of all, through this program, while you are living in your home of the future, you are also building equity, improving your credit and putting yourself in a position where home ownership is not only possible but easy.
Can You Give Me An Example?
The easiest way to understand it is going through a case study.
Every house-buyer situation is different but for the sake of numbers let’s use this example:
*3-bedroom and 2-bathroom home; with a basement, double garage and fenced yard.
Let’s say that based on your current financial situation we have agreed upon a 3 year term:
Rent To Own – 3 Year Case Study
The current market price of the property is $300,000
Let’s assume that based on your current situation and the particulars of the property we make a plan with you for three years. Then we agree to a future purchase price of $328,000 which is approximately 3% appreciation per year.
You have saved so far $10,000 to put down and we use this as your first initial down payment.
The target monthly rent for this house is $1,600 plus you want to save as much as possible for the future down payment so you decide to put another $500. So your monthly payment is $2,100. These additional $500 are going to be credited towards the purchase price of the house.
During the three years we have created a plan with our mortgage broker and credit consultants to assure you will be able to qualify for a mortgage.
At the end of the three years term you have been accumulated $28,000 (your initial $10,000 plus $18,000 from your option monthly payments of $500)
At this point you will have accumulated 3 years of good credit history which will allow you to qualify for a CMHC mortgage with only 5 to 10% down payment and then get the title of your home transferred to you!
Starting from there your approximate monthly costs of ownership including mortgage payment, taxes, insurance would be $1,775
You want to see how this looks in Summary?
Financial Summary – 3 Year Case Study
$ 1,600 Monthly Rent Component
$ 500 Monthly Option Credit to purchase
$ 2,100 Total Monthly Payment
Accumulated Down Payment
$ 10,000 Initial down payment
$ 18,000 Option credit accumulated over the term ($500×36 months)
$ 28,000 Total down payment paid over the term
Purchase Price balance at the end of the term
$ 328,000 Agreed purchase price at the end of the 3 year term
($ 28,000) Minus down payment accumulated over the term
$ 300,000 Balance owing, this amount will be financed with a mortgage
Expenses moving forward
After refinancing your approximately house cost will be approximately $1,775
$ 1,520 Monthly mortgage Payment (35 year amortization at 5% interest rate)
$ 180 approximate monthly tax payment
$ 75 approximate monthly Insurance payment
$1,775 Total monthly house payments
By now you may be thinking…
This seems very complicated, it may take forever… It is just the opposite! The whole process is faster than you can imagine…
Because there are no banks involved at this point we don’t need to go through the bureaucratic process they normally follow. After you submit your application we normally give you an answer within 24 hours.
Once you decide to go ahead we just have a couple of documents to sign and you can be moving to your new home within days!
Remember, regardless of whatever kept you from buying a home in the past, don’t let it stop you now!
You’re talking to the owner direct, not a realtor. We’re free to work it out between ourselves without banks dictating the rules.