Mortgage-Matters

Curious about rent to own?

You may have decided that you want to purchase a home, but maybe, for one reason or another, you don’t feel as though you can do it. 

There could be some bruising on your credit that you need to repair (a discharged bankruptcy or consumer proposal), lack of down payment funds, lower income due to maternity/paternity income, recently self-employed, or unexpected job change. There can be many reasons why you aren’t able to purchase now, or qualify for a mortgage. A rent-to-own program could be the perfect solution to owning a home, and for building up your own personal wealth.

Having a team to assist you through all the steps required in a rent-to-own program is very important. That team should include an experienced mortgage broker, a reputable rent-to-own company, an experienced real estate professional, a real estate lawyer, and a property investor. They will support your efforts to become a property owner through the program. They will walk you through, step by step, to ensure that this is the right option for you.

Before you enter into a rent-to-own agreement, information will be obtained to ensure that you qualify to enter into the agreement now, as a tenant. You will also be provided with a full picture of what you need to do to qualify for the mortgage at the end of the agreement, e.g. fix any credit issues, income clarification, and so on.
There should be a detailed action plan in place to cover the entire term of your agreement. You will be working on any issues identified in step one, so that you continue to qualify for the mortgage financing at the end of the agreement.

There should be regular check-ups by the mortgage broker to check that you are on track with the action plan, to ensure that you are a strong candidate to qualify at the end of the agreement.
Four months before you are due to take over your rent-to-own is the time to secure a mortgage rate guarantee for you with one of the lenders that offer financing for buyers at the end of their rent-to-own program.
You will need support to walk you through the entire process, step by step, right up to your funding date, to ensure that you close the purchase and become a home owner. 

A brief overview of how this type of agreements works

You would be entering into an agreement in which an initial deposit, generally between 3% to 10%, and a monthly payment (above your normal rent payment), acts as an accumulated down payment over the course of the contract term (one, two or three years). You would then use this accumulation of funds as the required down payment for the home purchase at the end of the contract. You agree to purchase the home after a term of two or three years, depending on your agreement, at the pre-agreed purchase price.

The key to a successful rent-to-own program is working with experienced professionals, and doing the critical first step of a detailed analysis to make sure this type of program is suitable for your circumstances.

Questions or comments: [email protected]

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About the Author

April Dunn is the owner and a Mortgage Broker with The Red Door Mortgage Group – Mortgage Architects. She has been assisting clients to purchase, refinance or renew their mortgages for over 20 years.

April has experience as a Credit Union manager, a Residential Mortgage Manager with a large financial institution and as a licensed Mortgage Broker. By specializing in Strategic Mortgage Planning she has the tools available to build a customized mortgage plan, with the features and options that meet your needs.

April provides a full range of residential and commercial mortgage financing options for clients all over the province of British Columbia and across Canada through the Mortgage Architects network.

Contact e-mail address: [email protected] or by phone at: 888-561-2679.

Website:  www.reddoormortgage.com



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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