Rent to Own

Are you tired of paying rent and exhausted from dealing with inflexible banks?

Well, you are not alone. Banks and traditional lenders are tightening their belts when approving mortgage applications. This means many people with good incomes are faced with circumstances that make it next to impossible to receive conventional bank financing if:

  • You lack an established credit history
  • You have poor credit
  • You are self-employed with less than 2 years of company history
  • You have credit challenges due to job loss, health issues, divorce or bankruptcy
  • You are in consumer proposal
  • You don't have as high a down payment as lenders and CMHC require

If you fall into any of these categories, and are finding it very difficult to buy a home despite having the necessary 5% down payment, you should consider a "Rent to Own" program (aka "lease to own").

There are different variations of rent to own. However, one recent program is quite interesting in that it allows you to choose the home you love, in an area you desire, at a price you can afford. 

A desired lease period is then determined to give you the time you need to correct any issues keeping you from getting financing from traditional lenders. Whether you need to repair your credit, or amass a more sufficient down payment, all of this is done without you wasting another dime on rent.

For this example, we are using a home to be purchased for $200,000 with a two-year lease. 

Category                                              The Lowdown                                    More Lowdown

Rental term                                           2 years                                             Typically between 1 to 3

Initial Down Payment                             5% of $200,000                                $10,000

End of Lease Purchase Price                    5% increase/year                              $220,500

                                               (Subject to change)

Monthly Lease                                        $1,360

Monthly Option Credit                            Goes to Final Down Payment             $340

Total Monthly payment                            $1360 + $340                                $1,700 + utilities

Down payment saved (2yrs)                    $340 x 24 months                          $8,160

Total Down payment available               $10,000 + $8,160                            $18,160

Amount to Purchase                             $220,500 - $18,160                         $202,340 (at end of the lease term)

So if you want to move right now, perhaps this program will work for you; talk to your mortgage broker or realtor. (You won't want to get into the lease-to-own world on your own; there can be pitfalls.)

Roy Singh is the broker of record at Century 21 Home Realty Inc. in Waterloo, Ontario.

11 Comments

  1. Paula 03/10/2010 at 6:28 PM

    i need more information about rent to own

  2. Paula Kulikowski 03/29/2010 at 5:10 PM

    I want more information about rent to own program thankyou

  3. abi 05/04/2010 at 2:20 PM

    This one really helps a lot specially to us who wanted to have our own house too.

  4. Abi 05/04/2010 at 3:44 PM

    I agree with what you said.. Thanks for posting it.

  5. Tim 06/19/2010 at 11:25 PM

    This is a good breakdown of numbers.

  6. jerry johnson 08/12/2010 at 12:12 PM

    need more information about rent to own and listings...thankyou

  7. KLH 05/03/2011 at 11:36 PM

    Looking for a listing of any rent to own homes/farms in the Yorkton and surounding areas.

  8. Rent To Own 05/06/2011 at 8:22 PM

    Thanks for posting this blog. Nowadays, people prefer to have Lease to Own/Rent to Own homes. I have come across to Lease to Own/Rent to Own site that fixes credit and provides FHA financing.

  9. Rent to own homes girl 07/15/2011 at 10:00 AM

    I have noticed that more people are preferring rent to own homes. I've had a lot of friends that want to move their family into a home, but just can't afford to buy one then. @KLH just keep putting those feelers out I'm sure you'll find something!

  10. Lease to Own 07/26/2011 at 10:33 PM

    good break down more people prefered lease to own

  11. chris meharg 01/03/2012 at 1:56 PM

    i make every year over 100,000 but i am divorced and my ex has screwed my credit late payments because she lives in my house and its in my name i just need more info on renting to own and can i pick any home on the market and do this plan please help

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