How does Rent-to-Own work?

We will buy the home of your choice, and you will rent it from us. You are then granted the exclusive right to purchase at the end of your lease term, Buyers find this alternative lending strategy attractive, because it gives them time to build credit, clean up past credit problems, save up for a larger down payment; all while living in a neighborhood they love.  At the end of the lease agreement, we are obligated to sell the property to you, however, you are not obligated to buy. A portion of your monthly lease payment and 100% of your initial option fee is credited towards the purchase price of your home.

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How much initial deposit is required?

Our requirement is that you have a minimum of 3% of the final home price, when you purchase the house from us after the lease period. If you do not have enough funds for your initial deposit, you may borrow funds from a family member, friend, or other sources of credit. The larger the initial option deposit, the less your monthly payments will be.

 

Your total option consideration (initial option fee & monthly option payments) will turn into your down payment, when you qualify and choose to exercise your option to purchase. 

 

If I have bad credit, can I still qualify?

Yes. However, every individuals situation is different.  We pride ourselves on servicing everyone's needs and our success is measured by the number of people we are able to help. That is why it is important that you are transparent with your financial situation, so that we may get a better understanding of how we can help you achieve home ownership. 

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What methods of payment are acceptable?

We will accept any form of certified funds (certified cheque, bank draft or money order) for the initial option fee. We cannot use your RRSP (via Home Buyers Plan) as your initial payment to us, however, you may be able to use your RRSP towards your down payment at the end of your term, when you complete the purchase.  

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If I am self employed, can I still qualify?

Yes. Our qualification process will take that into account that your income may not always be guaranteed.  Our mortgage broker will work with you to help make your income work to qualify.

 

Can I rent out the property?

Yes. Under the Alberta Residential Tenancy Act you may rent out the property. However, under the terms and conditions, you will be held fully responsible for any and all maintenance, damage, or repairs that may be occur. 

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Who pays for property taxes and insurance?

We do, and is paid on time to protect your investment. You will have to purchase your own tenants insurance to cover the content within the home.  You will also be required to pay your own utilities. 

 

Who pays for maintenance and repairs?

Although, you do not own the property at first, we treat you as the home owner. Which means you will be responsible for maintaining the property. Additionally, any improvements made, will add value to the home.  Keeping in mind that all homes will require some level of maintenance, so you must ensure to budget for this in your monthly payments. We also ask that you notify us first, if you wish to make any improvements, to ensure they comply with local codes. 

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Is the amount of the monthly payment negotiable?

The amount that you will pay each month will be fair market rent plus a monthly portion that adds to your initial deposit to get you to the amount you need in order to get the mortgage at the end of the lease.  Therefore, your monthly payment will be reduced with a larger initial deposit.

 

Is the purchase price negotiable?

No. The purchase price is a fixed amount based on a conservative estimate of the future value of the property at the end of your lease term,  This means that regardless of market fluctuations, or appreciation in value, the purchase price will not change.

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Who chooses the home?

You will. Once we have determined your purchase price, you get to choose the home and neighborhood you want to live in. However, as we have mentioned before, we want to protect your investment, therefore, a home inspection will be conducted to ensure there are no surprises. The cost of the inspection will be factored into your initial payment. 

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What happens if I cannot make my monthly payments?

We want all of our clients to be aware of the severity of missing your monthly payment prior to signing the agreement. It is imperative that you make your payments on time each month. Similar to missing payments with the bank, there will be consequences. In accordance with the terms and conditions of the signed agreement, if you miss a payment, you are in default and we reserve the right to start legal action to recoup all costs and monies owed; including legal fees.

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What happens if I do not purchase the home at the end of the lease?

We are making a large investment and it is our goal for everyone to be successful at the end of the lease term; but unforeseen circumstances may arise. Therefore, you are not obligated to purchase the home and can walk away; once the lease term has been met. However, you will not be refunded your initial option deposit, plus the monthly option credit that you pay each month on top of your rent.  In the event that a life altering incident has taken place, for example, job loss, or you were in an accident, we will refund 10% of the total option monies paid.

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How do the monthly payments compare to traditional mortgage payments?

Rent-to-Own payments are higher than normal rent, but, no different than what it would cost to own your own home. After you factor in CMHC costs, property taxes, property insurance, and your mortgage payment, you will actually be paying less with a rent-to-own, than paying a 5% interest rate mortgage.   

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How much appreciation do you factor per year?

We do not have crystal balls, and cannot predict what the market will be like in the future.  We work with our mortgage broker and will determine conservative percentages; somewhere between 3.5%-5% per year.  Currently, in Alberta, we are using 4%.

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Can you guarantee that I will be successful in obtaining a mortgage after the lease period?

Short answer is no. However, our team of mortgage brokers and credit counselors have extensive knowledge and experience with Rent-to-Owns and will give you the right tools and information you will need to be successful in obtaining a mortgage on your own.  We will meet with you every 30 days to ensure you are on the right path and are sticking to the plan we created for you. With that being said, how well you stick to the plan, and how you use those tools and information is up to you.  Success is achieved by the individual.

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When can I move in?

By the time we commence the initial assessment, meet with our mortgage broker, develop your customized plan and search for your home, it can take anywhere from 4-12 weeks. 

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Is Rent-to-Own a scam?

Nothing is perfect. However Rent-to-Own itself is not a scam. There are people out there that will not have your best interest at heart. There are people out there that will set unrealistic guidelines for a Rent-to-Own program to scam Canadians; and sadly those people have given people such as ourselves a bad name. The main reason why a Rent-to-Own Program does not work is because both the seller and buyer are uneducated. That is why it is important that both parties do their due diligence before entering into any form of agreement. 

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What are the next steps?

The Rent-to-Own application process is easy to get started. You can apply by filling out our initial client questionnaire or contact us to set up an appointment.  Please allow 1-2 business days to be contacted.