How Do Rent To Own Work Featuring Our
Canadian Rent To Own Homes Program 

What exactly is a Rent-To-Own Homes Program?

A Rent-To-Own Homes Program or lease option as it is sometimes known, is an ingenious program to help people who are currently not qualified for conventional mortgage financing to move into their chosen starter homes during a lease period.  At the end of the lease period when the tenant/buyer is finally qualified for a conventional mortgage, there is an option to purchase the home at a predetermined price. 

Think of such a program as a rental lease with option to buy homes.  An initial deposit plus a portion of each monthly lease payment (about 20%) will be credited back towards the final purchase price of the home. 

Who is the Rent-To-Own Homes Program for?

This program is generally for those who have less than perfect credit in the eyes of most creditors and financial institutions.  Past habits of late or missed loan and credit card payments might have resulted in low credit scores which disqualify prospective homeowners for conventional mortgages.


Some people such as new immigrants may have no credit history and it will take some time to establish credit in Canada.  Others might have good credit histories but currently do not have enough funds for down payments required for mortgages.

People who have gone through bankruptcies, major health issues, divorces, ID thefts and many self employed individuals who were not able to meet monthly expenses could also end up having bruised credit.  Such bad credit histories again prevent these people from obtaining mortgage financing.

Even current homeowners who are at risk of losing their homes through foreclosures because they are not able to keep up with current mortgage payments, can benefit from a Rent-To-Own Homes Program.

Our Rent-To-Own Homes Program is designed to help all of these people make a successful transition from renters to homeowners while repairing or establishing their credit histories as well as saving up for a down payment.
 

How does Rent-To-Own work in Canada?

There is an approval process including a pre-qualification followed by a final approval step that involves verification of certain supporting documentation we require.  Fully approved tenant/buyers will then be invited to start our Rent-To-Own Homes Program in which we set you up with a realtor in your chosen location to find your dream starter home.


With consultation with a mortgage broker, we determine the price range of a home, the initial deposit and monthly lease payments you can afford.  The fun then starts as you go find the home you want to live in with the help of the realtor.  Once you locate the home, we (or one of our associate investors) purchase the property on your behalf and determine the final option purchase price at the end of the lease term.

When you move into your dream starter home, you live in it as a tenant paying monthly lease payments but maintain it as if it was your own property.  So you can renovate and repair it as you desire.  After all, this will likely be the home that you will buy and own at the end of the Rent-To-Own Homes Program.


During the lease period, we will work with you with the help of the mortgage broker and sometimes a credit repair specialist to rebuild your credit.  With a committed credit repair program including consistent savings as well as expenses control, you will finally be in a great position to qualify for conventional mortgage financing for your home by the end of the lease period.

So in essence, you pick your home.  We buy it in the meantime and you rent from us.  At the end of the lease period, you buy it from us at a set price when you finally become a homeowner!

What type of properties are eligible for this program?

All types of resale homes are eligible from detached single family houses, semi-detached units to both condo townhouses and high-rise condos.  Brand new homes however, are usually not within affordable starter price ranges especially with taxes added in.

How long is the lease with option to buy homes?

We will determine the actual duration of the Rent-To-Own Homes Program in consultation with the mortgage broker.  We will estimate how long it will take to repair your credit and be qualified for conventional financing. 

It is our goal to help you finally become a homeowner so we want you to be able to exercise the purchase option at the end of the lease period.  Normally, the lease period is two or three years but in some cases, it can be as short as one year or as long as four years.

How much is the initial deposit?

The initial deposit is usually about 5% of the current price range of a home located in major centres.  In the case of more rural areas, we would require up to 10% (we may not pre-qualify for all rural areas).  But this is still much lower than the typical conventional mortgage financing requirement of 20% to 25% down payments for properties.

For example, you would need $5,000 as a 5% initial deposit for a $100,000 home, $7,500 for a $150,000 home, $10,000 for a $200,000 home, $12,500 for a $250,000 home, $15,000 for a $300,000 home, etc.

Note that this initial deposit will be FULLY credited towards the final purchase price of the home at the end of the lease period.

If you do not have funds for a 5% initial deposit, you would NOT pre-qualify for a lease with option to buy homes at this time.  We would suggest that you begin a regular savings program to save up enough for an initial deposit at which time you could apply to our program.

What other costs are involved in Rent-To-Own?

Once you are fully approved for our Rent-To-Own Homes Program, we will require a small portion ($500) of the initial deposit up front before we can begin the process of setting you up with a realtor to find your dream starter home.  For example, if the total initial deposit is $5,000, then the balance would be minus the $500, which would be $4,500.

You can consider the $500 as an application fee or program activation fee even though it is part of the initial deposit, which will eventually be fully credited towards the final purchase price of the home at the end of the lease period.

Your payment of this $500 shows that you are serious in starting this Rent-To-Own Homes Program.  We will refund this $500 in full to you if for any reason, you should wish not to begin the Rent-To-Own Homes Program within 48 hours of payment but before you begin looking at properties with a realtor.  After the 48 hours, this $500 will be non-refundable.

In cases where you are applying to rent to own an existing property (one we happen to currently offer or your own property), there will be no $500 fee required since a property search is not required.

When is the final option purchase price of the home determined?

We will specify the final option purchase price of your dream starter home at the beginning of the lease period.  This will be stated clearly on contract and will not be negotiable.  You will also know how much the monthly lease payments will be as well as the amount of option credits towards the final purchase price of your home. 

This way, you know ahead of time approximately how much your home will cost at the end of the program.  This will in turn help you plan for your future application for eventual conventional mortgage financing.

How are the monthly lease payments determined?

The monthly lease payments actually involve two components.  On paper, the monthly lease will appear to be a bit higher than market rental rates but this is because there is a rental component PLUS an option credit component.  About 20% of your total monthly lease payment is the option credit portion, which will be credited towards the final purchase price of the home at the end of the lease period.

Think of this 20% portion as a forced savings program that will help you successfully buy the your home from us at the end of the program.

What happens if I am late on a lease payment or if I fail to make payments?

In the event of late lease payments, the 20% option credit for that particular month (and that month only) will NOT be credited towards the final purchase price.  You will lose that month's option credit.

If you fail to make payments, we will unfortunately be in much like a typical rental situation where a possible eviction process will begin.  So it is your responsibility and everyone’s interest to make your monthly lease payments on time.  We want you to be successful with this Rent-To-Own Homes Program.

What if I need more time before I can exercise the purchase option at the end of the lease period?

If you need more time (to build better credit or save up for a down payment) before you can exercise the purchase option, there is a possibility that we can extend the Rent-To-Own Homes Program by another year for you.  Again, we want you to be successful and we will do what we can to help you transition from a renter to a homeowner.

What if I choose not to exercise the purchase option or vacate the home before the lease period ends?

It is your right to choose not to buy the home at the end of the lease period.  That’s why it’s called a purchase option.  However, the initial deposit that you originally paid as well as the monthly option credits built up during the lease period will NOT be refunded back to you. 

If you vacate the property before the program ends, you will also lose the initial deposit and any monthly option credits built up.  This Rent-To-Own Homes Program is designed for those committed to buying their homes at the end of the lease period. 

We let you choose your home to live in rather than trying to get you into a property we already own.  This way, we hope to maximize the chances that you and your family will want to buy the home at the end of the lease period.

But of course we realize that things can change.  However, we must retain the initial deposit and monthly option credits to help recoup our own costs of the program.  This is the same as in situations where mortgages or car loans are in default.  The lender retains any deposits made.

Is it possible to purchase the home early before the lease period ends?

Yes, if you become in a financial position to purchase the home before the program ends, we can negotiate an early settlement.

Who pays for maintenance and repairs during the lease period?

Unlike a typical rental situation, you as the tenant/buyer pay for all maintenance and repairs during the lease period.  This is because in a lease with option to buy homes program, you live in the property that you will eventually purchase.  You will be living in the future home that you will own.  So you maintain and repair it as you see fit much like homeowners do with their properties.  You will also be responsible for all utilities for your home.

You can also renovate and landscape the property as you wish.  Many previous tenant/buyers in Rent-To-Own Homes Programs have made renovations at their own expense during lease periods.  After all, it is your future home, the one that you chose for your family.


To ensure that your home is in good condition before you move in, there will be a home inspection to uncover any major issues.  We can negotiate with the seller as needed if there are any deficiencies or even choose another property to acquire for you.


Please note that the cost of the home inspection will be your responsibility since you want to be sure of any defects of your future home.  We will ask that you be present during the actual home inspection as well.


Can we have pets in the home during the lease period?

Of course, this is your future home which can include pets.  The only exception would be condo high-rise units that do not allow certain pets as per the condo rules for certain buildings.

Who pays for property taxes and insurance?

Since we are the title owners of the property during the program, we will pay all property taxes and property insurance.  However, we highly recommend that you obtain home contents insurance as a tenant for the duration of the lease period.

How can your Rent-To-Own Homes Program help me if I’m already a homeowner who is presently at risk of losing my home (in pre-foreclosure)?

It might be possible for us to purchase your home and then have you rent from us during a lease period.  Then assuming that your financial position and credit are significantly improved by the end of the lease period, you can buy your home back from us at a predetermined purchase price just like in other Rent-To-Own Homes Programs.

In some cases where it is determined that you can no longer afford to stay in your present home, we may require you to sell it on the market and choose a downsized home as part of the lease with option to buy homes program.  At least this way, you will be saving your credit rather than going through a possible foreclosure.

How can you help me repair or establish my credit during the Rent-To-Own Homes Program?

We will have you work with a mortgage broker and a credit repair specialist if required during the program to build steps toward an eventual successful qualification for conventional mortgage financing at the end of the lease period.   We will also check up on you from time to time to ensure that you are on track.

Now that I understand how Rent-To-Own work, how do I apply and get approved?

There is an online application at this website for pre-qualification.  Once you submit it, we will determine whether you are pre-qualified or not.  If you are pre-qualified, we will then ask that you send in certain supporting documentation that we can verify. 

We need these in order to fully approve you.  Failure to provide adequate supporting documentation in a timely manner will indicate to us that you may not be 100% fully committed to our program and will result in non-approval.

Keep in mind that an approval is NOT based on your credit.  After all, we are here to help you because your credit history is less than stellar.  We will look at your application on the whole to determine if you will be approved or not.

If you become fully approved, we will contact you for a meeting to further discuss your case and proceed to have some contracts signed.  You may have your lawyer review the contracts prior to signing if you wish.


If you do not meet our criteria for either the pre-qualification or final approval steps, we will let you know where you fell short so that you can work on improving those areas.  You are more than welcome to re-apply again in the future once those issues are sorted out.

Since the acquisition of your dream starter home is dependent on us (or one of our associate investors) buying the property on your behalf at the beginning of the program, there might be a chance that we are unable to accommodate you if we are already at full capacity with this program with other tenant/buyers or if we currently do not have available investors funding the acquisition at the time of your application. 

So for various reasons, we might not be able to successfully acquire a property for you.  We will let you know if this is the case and any deposits or fees you made will be fully refunded back to you.

Although we will consider applications from all across Canada, our main areas of focus are larger centres in southern Ontario.  We do not administer programs outside of Canada.

If I am interested in this Rent-To-Own Homes Program, what should my next step be?

To apply for our Rent-To-Own Homes Program, see our Apply To Pre-Qualify Now section.

If you haven’t already, we invite you to view our video on our home page, which also explains how our lease with option to buy homes or Rent-To-Own work.

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