How to rent-to-own a home in Ontario, Canada
There are many people who would love to buy their own home, but don’t feel it is something that is realistic for them to do just yet. It may be because of bad credit, not enough savings for a down payment, or perhaps the type of house in the area you want is just too expensive for a conventional mortgage. A rent-to-own home can be the answer.
As a real estate investment group, we are able to offer rent-to-own homes in Ontario with payment plans that just about anyone can afford. In fact, we can probably get you into a home that's exactly what you and your family want! (See our featured houses here.)
What rent-to-own means
Rent-to-own homes available now
With a rent-to-own agreement, you pay your monthly rent, and a portion of the rent goes towards your down payment for the house purchase.
There's no need to wait until you've saved up enough of a down payment, or until your credit rating is repaired. You can build up your down payment while living in the home you want to buy. It will feel like your home before you even own it.
With a rent-to-own home, you can stop being a tenant...
...and invest in your own future.
Even if you have bad credit or not enough cash for a down payment, a rent-to-own program is designed for you to take advantage of a home owning opportunity. It allows you to make a proactive step and own a home early.
Is there a downside to a rent-to-own home?
“What if I made a bad decision?”
“What if I get transferred?”
“What if we just change our minds about this house?”
The rent-to-own agreements that we offer won’t lock you in. Because life can bring unexpected changes, we give you an escape clause in case you change your mind about buying the house. All you lose is the amount of the downpayment that you’ve already paid.
Of course you will need to give us notice, but at least there is comfort in knowing that you have an out. Just another nice feature of a rent-to-own agreement.
How much will the monthly rent be?
The monthly payment for a rent-to-own agreement will depend on your budget. The larger your payments, and the longer you make them for, the larger the accumulated downpayment will be when you exercise your purchase option and get a mortgage in your own name.
To secure the property in the beginning, you will also need to put down a deposit on the house. We require a minimum deposit of 7.5% of the purchase price, or $15,000, whichever is greater — unless listed otherwise for a specific property. Houses or condos listed for $100,000 or less have a minimum deposit of $10,000. In either case, this amount is credited towards your downpayment when you buy out the lease with your own mortgage.
As a rough rule of thumb, the payments on a rent-to-own home may be around 30% more per month than an equivalent rental property. The extra payment amount is your investment into owning your own home. You can negotiate for how long you want the rent-to-own agreement to last before you have the option to buy, and how much you want your monthly rate to be.
An example of a rent-to-own agreement
Let’s say that you are renting-to-own a house worth $200,000 that would normally rent for $1200/month, in an area that is appreciating by 5% per year. Here’s how your downpayment would build up with a $15,000 initial deposit and a $350 monthly lease option payment:
Buyout price (5% appreciation):
Months of lease option:
Total accrued downpayment:
Downpayment % of purchase price:
At the end of your rent-to-own agreement, the sum of your initial deposit and your monthly payments will count as a downpayment for your own mortgage. To know exactly how much of a downpayment you will need, we can schedule an appointment for you with our mortgage broker, who is already very familiar with rent-to-own agreements and can get you the best possible rate on your mortgage.
The perfect rent-to-own home for you
Let us know what kind of house you are looking for and in what area. We may already have a rent-to-own lead there for you. Or if not, we can find one.
What do you want in a home and where are you looking? Please fill out the rent-to-own form below and we will get the process moving.
In a matter of a few months, you could be living in your very own home!
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