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How Renting to Own Solves Down Payment Problems

First Time Homebuyers | JAAG |

As most of us know, it’s becoming more difficult than ever for first-time homebuyers to secure the home of their dreams, thanks to rising house prices, higher interest rates, and a higher debt load than ever before. We discuss why saving for a down payment is so challenging in the current real estate market, and what you can do to fulfill your dreams of homeownership, even in this tough economic climate.

The Down Payment Problem

One of the most challenging aspects of buying a home, especially in today’s ever-changing real estate market, is saving up for the down payment. In Canada, 5% is the minimum down payment needed to qualify for a mortgage, and with the rising cost of housing and stagnant wages, that goal is a constant moving target.

If you’re struggling to afford a home under these conditions, recent studies on housing costs show you’re not alone. An RBC survey shows that as much as 36% of non-homeowners under 40 have given up on the dream of ever owning a home in this market.

Fortunately, there is a new alternative to simply saving endlessly for a down payment: Rent to Home.

The Rent to Home Solution

A rent to own agreement allows you to rent and live in your chosen home for a set term before being given the option to purchase it.

You don’t have to qualify for a mortgage. You don’t need perfect credit, or indeed, any credit. While you rent your home, you’ll build positive credit and save money for your down payment to buy your home at the end of your term. It’s that simple.

How Rent to Own Programs Solve the Down Payment Problem

If you’re struggling to save the 5% down payment on a home, our Rent to Own program is for you. You’ll only need to present a 3% down payment to qualify, even if you have a low credit score or no credit score.

As you rent with us, we’ll collect “credits” to fund your eventual down payment. We’ll also provide you with top-notch financial education through a Certified Financial Planner, plus real estate and mortgage advice through top realtors and brokers. All of this is included as part of your Rent to Own package and is provided to you at no additional cost.

At the end of your term (typically 3 years), you’ll have built a strong credit history and have saved enough to purchase your home from us. Congratulations, you’re a homeowner!

Overcome Your Down Payment Problems with JAAG Properties

If you’re having trouble saving for a down payment, our Rent to Own program was designed with you in mind. Stop sinking money into rent that ultimately only benefits your landlord and start saving towards a home you love. Apply online with us today or contact our friendly staff for assistance!

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Understanding the Canadian Mortgage Stress Test

Mortgages | JAAG |

If you’re confused by the mortgage stress test, you’re not alone. We break down the factors that influence your stress test results and review your options if you’re unable to qualify for a traditional mortgage.

What is the Canadian Mortgage Stress Test?

The Canadian mortgage stress test is an evaluation that banks are required to use to determine whether you’ll be able to pay your mortgage if interests rates rise.

Introduced by the federal government in 2018, it ensures that homebuyers purchase a home they can afford and considers a variety of financial factors.

Who Must Complete a Mortgage Stress Test?

Anyone applying for a traditional mortgage in Canada must complete the mortgage stress test. You’ll also need to complete it if you’re refinancing, changing mortgage lenders, taking out a second mortgage, or applying for a home equity loan.

How Does the Mortgage Stress Test Work?

The mortgage stress test works by considering the full picture of your financial situation. Lenders will look at your mortgage amount and current interest rates, along with your mortgage amortization period. They’ll consider these factors alongside your household income, housing costs, and your current debt load.

You fail the mortgage stress test if the percentage of your pre-tax income you’ll use to pay for housing costs exceeds 35%, or if your outstanding personal debt is greater than 42% of your pre-tax income.

What to Do If You Fail the Mortgage Stress Test

If you fail the mortgage stress test, you won’t be eligible for a mortgage through a bank. There are several ways to improve your financial situation so that you stand a greater chance of passing the stress test.

Increase the Amount of Your Down Payment

The higher your down payment, the lower your monthly mortgage payments will be. Lower mortgage payments will lower your ratio of housing costs vs. income, making it more likely that you’ll be approved.

Improve Your Credit

A credit score below 700 is a major problem when trying to pass the mortgage stress test. Improve your credit by making payments on time and by paying down debt quickly. Less debt makes you more likely to pass the mortgage stress test.

Try a Rent to Own Program

Our Rent to Home Solution allows you to live in and rent your home for a set term before having the option to purchase it from us. Our program is designed so that even those who fail the mortgage stress test can eventually qualify for a mortgage.

We prepare you for homeownership by helping you save money for your down payment and providing access to realtors and financial planners to help you find the home that’s right for you and budget accordingly. As you pay rent, you’ll also automatically improve your credit rating.

Why Choose JAAG Properties

If you’ve failed the mortgage stress test, don’t give up! You can still qualify for a mortgage with the help of our Rent to Own Program. Apply online today or contact us for more information.

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Options for Homeownership When New to Canada

Immigrants | JAAG |

As a newcomer to Canada, you may feel you have few options when it comes to homeownership. While it’s true that newcomers often struggle to qualify for traditional mortgages, we’ve reviewed some of the alternatives, including the pros and cons of each.

1. Newcomer Mortgages

Newcomer mortgages are a special type of mortgage that some Canadian banks offer. To qualify, you must have immigrated less than 5 years ago, be employed full-time for at least 3 months, have a 5% down payment, and meet the qualification ratios for debt vs. income.

Even with relaxed requirements on credit and work history, many newcomers still struggle to qualify, making this a good option only for well-established immigrants with access to capital.

2. Private Lenders

Private lenders are individuals or private companies that lend money from their personal funds. Because they aren’t regulated in the same way as banks, they can grant mortgages to people who can’t pass the mortgage stress test.

However, this doesn’t necessarily mean it’s easy to qualify. Most private lenders require you to have at least a 15% down payment to compensate for the additional risk they take on by lending to you. That said, you may find that private lenders are more willing to overlook a lack of Canadian credit or employment history.

3. Home Buyers’ Plan (HBP)

The Home Buyers’ Plan is a government initiative that allows you to withdraw money from your Registered Retirement Savings Plan (RRSP) to use for a down payment on a home. If you have a Canadian RRSP, you may be eligible to withdraw up to $35,000, but it must be repaid within 15 years. Unfortunately, many newcomers don’t have an RRSP and can’t take advantage of this program.

4. Rent to Own Program

A Rent to Own Program allows you to rent your home for a set term before being given the option to purchase it. With our Rent to Own Program, you don’t need a massive down payment. You don’t need an extensive credit history. In fact, our program was designed to help those with no credit achieve their dreams of homeownership sooner.

We’ll guide you towards homeownership by helping you save money for your down payment. As you pay rent, you’ll also create a Canadian credit history and improve your credit score. We’ll provide you with realtors, if you don’t already have one and financial planners to help you budget and plan for your future. At the end of the term, you’ll purchase your home from us and become a homeowner.

Rent to own is the best option for newcomers because it allows you to live in your home immediately, letting you get established in Canada before you make the leap into homeownership.

Begin Your Homeownership Journey with JAAG Properties

Homeownership in Canada doesn’t have to be a distant dream for you and your family. Find a home you love in and move in right away with our Rent to Own Program! Apply online today or contact us for more information.

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What You Need to Know About the First-Time Home Buyers Incentive

First Time Homebuyers | JAAG |

Struggling to afford a home as a first-time buyer? You’re not alone. In response, the Government of Canada has created the First-Time Home Buyer Incentive to help first-time buyers achieve their dreams of homeownership.

What is the First-Time Home Buyer Incentive?

The First-Time Home Buyer Incentive is designed to help first-time buyers by providing additional funds for a down payment on a home. It’s a shared-equity mortgage with the Government of Canada intended to reduce monthly mortgage payments and make housing more accessible for first-time buyers.

What are the Eligibility Requirements?

To qualify for the First-Time Home Buyer Incentive:

  • You must be a Canadian citizen, permanent resident, or non-permanent resident authorized to work in Canada.
  • Your total income is less than $120,000, or $150,000 if you are purchasing in Toronto, Vancouver, or Victoria.
  • Your mortgage is no more than 4 times your qualifying income, or 4.5 times if you’re buying in Toronto, Vancouver, or Victoria.
  • You or your partner are first-home home buyers.
  • You meet the minimum down payment requirements with your own funds.

What Types of Houses Qualify?

Most types of homes qualify with the exception of investment properties. Your prospective home must be in Canada, and it must be available for full-time, year-round occupancy. This can include:

  • Single family homes
  • Semi-detached homes
  • Duplexes
  • Triplexes
  • Fourplexes
  • Townhomes
  • Condos
  • Mobile homes

How Much Money Can First Time Home Buyers Get?

The incentive is calculated based on a percentage of your home’s purchase price. For example, if you purchase a pre-existing home for $500,000, your incentive amount would be 5%, bringing the total incentive amount to $25,000.

Newly built homes qualify for a larger incentive, up to 10%. Existing homes or mobile homes qualify for 5%.

When Do I Need to Repay the Incentive?

The incentive is repayable whenever you sell your home or after 25 years, whichever comes first. It is interest-free.

Your repayment will be calculated based on the percentage you were granted (between 5-10%) along with the value of your home. If your home increases or decreases in value, the payment will be adjusted accordingly. For example, if your home sells at $600,000 and your incentive was 10%, you would pay 10% of the new value, or $60,000.

How Do I Apply?

Before you can apply, you must be pre-approved for a mortgage and find the home you wish to purchase. If you’re having trouble qualifying for a mortgage, our Rent to Own program can help! After you’ve done this, you can apply for the First Time Home Buyers Incentive online at the CMHC website.

Experience Homeownership with JAAG Properties

The First-Time Home Buyers Incentive can be a wonderful complement to our Rent to Own program, allowing you to own your home sooner than you think. Whether you’re new to Canada, have gone through a divorce or separation, or have bad or no credit, we can help! Contact our representatives to learn more.

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Why Are My Credit Scores Different Across Different Sites?

Credit Score | JAAG |

Your credit score may be the single most important piece of financial information about you, as it often decides whether you qualify for loans, credit cards, and a mortgage. If you check your score regularly (as you should!), you may have noticed discrepancies between Equifax and TransUnion scores. Don’t panic! There are a variety of reasons your score may differ slightly between credit bureaus, and most of them are benign and won’t hurt your score.

However, if you notice large discrepancies, always contact your credit bureau to rule out credit fraud.

Reasons Why Credit Scores Vary

Types of Data & Information Provided to Credit Bureau

Credit bureaus primarily base your credit score on information they receive from lenders, and not every lender or creditor sends reports to all credit bureaus. Sometimes a lender will only provide data to one bureau, or they will send reports to bureaus at different times. This can lead to discrepancies between various credit bureaus.

Differences in Credit Checks

In the world of finance, there are two types of credit checks: “soft” and “hard.” When you check your credit score through an online report, this is considered a soft credit check. Soft credit checks do not affect your credit score.

Hard checks, on the other hand, are formal requests from credit bureaus to examine your credit score and history. These checks are usually conducted when you apply for a loan, credit card, or mortgage.

Multiple hard checks at once can damage your credit score because bureaus monitor these checks to learn about consumers who may have a higher debt load than they can handle or may be short on funds. These consumers are a higher risk for lenders, and their credit scores will reflect this reality. As a result, it’s best to only apply for credit that you truly need.

Differences Between Credit Scoring Models

Not all lenders or creditors use the same scoring models, and this can lead to discrepancies in your credit scores. In Canada, most lenders use the FICO scoring model, but there are dozens of other scoring models out there, all of which evaluate criteria slightly differently. There are even variations between different FICO models!

Date of Comparison

Not all credit bureaus update scores at the same time. Depending on when you view your credit report, you may notice discrepancies between bureaus because one score has not been updated as recently and is outdated. Try checking again at a later date to see if the discrepancy corrects itself. If it doesn’t, contact the credit bureau directly.

Build Credit Towards a Home with JAAG Properties

If you are struggling to qualify for a mortgage due to bad credit or no credit, we can help! Our Rent to Own program was designed with you in mind, allowing you to live in your new home while you build good credit and save money for a down payment. Apply online today or contact us for a consultation!

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Ways to Save Up for a Down Payment to Buy a House

First Time Homebuyers | JAAG |

Saving for a down payment is a significant hurdle for many first-time home buyers. Adopt a few of our favourite financial strategies, along with careful budgeting, to help you build your savings, allowing you to achieve your dreams of homeownership.

Understanding the Minimum Down Payment

A down payment is the money you pay upfront in cash when purchasing your home.

The price of your new home determines your minimum down payment. For homes under $500,000, the minimum down payment is 5%. For homes over $500,000, you’ll need 5% on the first $500,000, plus 10% on any amount after that. For homes over $1,000,000, 20% is required.

How to Save Money for a Down Payment

Cut Your Expenses

Creating a budget is a great first step in saving for a down payment. Calculate how much you can afford for a home, then work towards a down payment based on this number.

Include things like rent, food, and other necessities in your budget, then decide how much you’ll dedicate to a savings account. Try to cut down on luxuries like dining out, entertainment, and travel so that you can grow your savings each month.

Move Your Money into a High-Interest Savings Account (HISA)

High-interest savings accounts help you earn interest on your savings, and every bit counts! Try shopping around at digital banks or credit unions, which typically offer more competitive rates.

Open a First Home Savings Account (FHSA)

A First Home Savings Account is a new type of savings account created by the Government of Canada. You may contribute up to $8,000 per year, up to a lifetime maximum of $40,000, and take a tax deduction to offset the tax you paid on your deposits. Your savings in a FHSA can be grown and withdrawn tax-free.

Open a Tax-Free Savings Account (TSFA)

A Tax-Free Savings Account allows you to grow your savings without paying income tax on it, making it a great way to keep more money in your pocket. Unlike some investments, you can make withdrawals whenever you wish.

Use Your Registered Retirement Savings Plan (RRSP)

You may use funds from your RRSP to help you make a down payment through the Home Buyers’ Plan. You can withdraw up to $35,000, tax-free, for your down payment. However, you need to repay this amount within 15 years.

Become a Homeowner with JAAG Properties

Homeownership isn’t out of reach with our Rent to Own program! Own your home in as little as 3 years, even if you have bad or no credit, are newly divorced or separated, or are new to Canada. We provide the tools and mentorship to allow you to live in your home while you save money for a down payment. At the end of your term, you’ll purchase your home from us and become a homeowner!

Apply online or contact us today to learn more about how we can help you achieve your dream of homeownership.

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Buying a Home: Minimum Down Payment Requirements

Mortgages | JAAG |

It is important to know the financial requirements before making a house purchase. JAAG Properties, a leader in helping people buy homes, stresses the importance of having a good understanding about minimum down payment. This information is essential when you are planning for your ideal house.

How Does the Minimum Down Payment Work?

A minimum down payment is a crucial component of the house-buying process. It is the lowest sum you can pay upfront to get a mortgage. The minimum down payment requirements change according to the loan type and lender. It typically falls between 5 per cent and 20 per cent of the price of the house depending on the purchase price of the house. This down payment affects the remainder of your mortgage agreement by showing the lender you are committed to lowering their risk.

How a Down Payment Influences the Mortgage Rate?

Your mortgage rate is greatly impacted by the minimum down payment for mortgage. Increasing your down payment on a mortgage can be a wise financial decision. Lower interest rates may be awarded to you in addition to lowering the lender’s risk. Conversely, making a smaller down payment results in higher interest rates and the additional expense of private mortgage insurance (PMI). If you default on the loan, this insurance safeguards the lender. As a result, your down payment amount may greatly impact your long-term financial situation.

Saving for your Down Payment When in a Rent-to-Own Agreement

The down payment for a house is different from conventional mortgage agreements with rent-to-own contracts. A percentage of your rent is applied toward the down payment on the property in rent-to-own situations. This can be a fantastic alternative for people who cannot afford to make a sizable down payment upfront.

Why Choose JAAG Properties for Homeownership?

Being able to answer the question, “How much do you need for a down payment?” is a big step toward becoming a homeowner. Potential homeowners are encouraged by JAAG Properties to explore their options, including rent-to-own solutions.

The goal of owning a home can be attainable thanks to these solutions which help you save towards a down payment. If you are considering homeownership, contact JAAG Properties for help navigating the process.

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Why Rent to Own When You Can Just Rent?

Rent to Home | JAAG |

Renting and renting to own are both valid options depending on your lifestyle and goals, and both have unique benefits. For those who anticipate relocating in the near future, renting may be the preferred option, whereas people who are looking to settle down and make an investment in their future may find what they’re looking for with rent to own solutions.

Renting VS. Renting to Own

Renting involves paying a landlord for the use of their property. Renting to own differs in that you rent your home with the intent to buy it after a set term. Rent to own programs often collect additional funds on top of rent to fund your eventual down payment on the property.

Benefits of Renting

Flexibility

Flexibility is a major advantage of renting. If you need to relocate, or move house, renting allows you to simply give notice and leave within a couple of months. You don’t need to go through the hassle of selling your home.

Lower Upfront Costs

Renting costs less upfront than homeownership because you aren’t responsible for buying the home or maintaining it. Rent is a reliable monthly cost that makes it easier to budget and plan ahead financially.

Benefits of Renting to Own

Builds Equity

Renting to own provides the opportunity to build equity over time, as well as a portion of each rental payment contributes towards eventual ownership of the property. The gradual accumulation of equity can serve as a stepping stone towards financial stability and future investments. As the home value increases, so does your equity.

Potential for Homeownership

Renting to own presents a path to potential homeownership for individuals who may not currently qualify for a traditional mortgage or lack the upfront funds for a down payment. This flexibility opens doors to those aspiring to own a home but facing obstacles in the conventional home-buying process.

Fixed Purchase Price

Having a fixed purchase price agreed upon at the beginning of the rent to own arrangement provides clarity and stability, shielding tenants from market fluctuations and ensuring they have a set goal to work towards throughout the rental period. This predictability can offer peace of mind and help tenants plan for their future housing needs more effectively. You also know the exact amount of down payment that is required to purchase the home at your predetermined purchase price.

Rent to Own Considerations

Financial Considerations

While rent to own programs have an initial deposit, there are also many financial benefits. The rent credits you pay towards your eventual down payment help you practice financial discipline. If you have poor credit or no credit, rent to own solutions give you time to build good credit and allow your score to recover from unexpected expenses.

You’re also building towards a healthier financial future. Rather than paying your landlord’s mortgage, you’re laying the foundation for owning a home of your own and building equity.

Maintenance Responsibilities

The maintenance responsibilities in a rent to own arrangement may vary. Some agreements require tenants to cover maintenance costs, while others set a dollar amount over which the landlord is responsible for maintenance. Read your contract so you can plan accordingly.

Personal Considerations

Consider your long-term goals when choosing between renting vs. renting to own. Is owning a home important to you? Do you like having the freedom to adjust your space to your needs and renovate at will? Do you plan to live in the same place for the foreseeable future? If you plan to settle down, renting to own may help you achieve your dreams of homeownership in a shorter timeframe than buying.

Which Solution is Right for Me?

Renting or renting to own is a personal choice, and what’s best for you will vary depending on your financial situation, priorities, and values. Our experienced advisors can give you expert advice on your options and help you make the choice that’s right for you.

Own Your Home Sooner with JAAG Properties

No matter your situation, you can own your home sooner with our Rent to own program! Apply online today or contact us for more information.

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Options for Homeownership with Low Down Payment

First Time Homebuyers | JAAG |

Buying a property with a high down payment can be difficult. At JAAG Properties, we remove that stress by purchasing your dream home on your behalf for a three-year term. This allows you to move into your home and start a saving program which will work towards your mortgage and down payment.

How Does a Mortgage Payment Work?

It is important to comprehend how a mortgage payment operates if you are considering buying a house, especially when exploring options for homeownership with low down payment. Mortgages are loans from financial institutions to buy a home. Your monthly mortgage payment includes principal, interest and sometimes property taxes and insurance. This payment often covers mostly the interest, especially in the early years of the mortgage.

Options for a Mortgage with Low Down Payment

In the current market, homeownership with low down payment has grown more alluring, particularly for people who might not have significant funds. For those wondering “can I buy a home with low down payment?,” exploring rent to own programs can be an ideal starting point. Let’s investigate some workable choices.

Rent to Own Programs

Rent to own programs offer an alternative method to become a homeowner with a lower down payment. At JAAG Properties, our Rent to Home Solution is designed to allow you to live in your new home while saving for your full down payment. Requiring just a 3% down payment, our program is perfect for families that have diligently saved for a down payment but require support in qualifying for a conventional mortgage. During the term (about 3 years), you’ll pay for rent, property taxes, property insurance, and a savings credit aimed at helping you accumulate money for a traditional down payment.

Borrowing Money from a Family Member

Securing a mortgage through a family loan can bypass the need for a down payment. These loans often feature lower to no interest rates and flexible repayment terms, making them more favourable than conventional loans. It’s crucial to formalize this arrangement in writing to avoid misunderstandings.

Why Rent to Own Could Be Your Home-Buying Solution

Although there are other ways to become a homeowner with a low down payment, rent to own programs are particularly advantageous. This solution makes it easier to become a homeowner while allowing you to build equity over time. Rent to own programs can help consumers save for a down payment. Anyone looking to enter real estate with a minimal down payment should consider it.

Want to discuss our Rent to Home Solution? Contact the JAAG Properties team today.

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A Newcomer’s Guide to Buying Your First Home in Canada

First Time Homebuyers | JAAG |

Buying a home in today’s market is a challenge even for Canadians, so as a newcomer, you’re often at a disadvantage. Thankfully, we’ve compiled a handy guide to help you navigate the homebuying process!

What Newcomers Need to Know About Buying a Home in Canada

Eligibility Criteria

Both permanent and non-permanent residents may purchase a home in Canada, as long as non-permanent residents have a work permit.

You’ll need a Canadian bank account, and proof that you have enough money to make a down payment. You should also have a credit score of at least 680 to become a homeowner.

Mortgage-Related Terminology

Mortgage terminology varies around the world. That’s why it’s important that you understand Canada’s terms before you begin your homebuying search. Key terms to know include the following:

  • A mortgage is money you’ve borrowed to purchase your home. It covers the cost not covered by a down payment.
  • A down payment is a percentage of the purchase price that you pay in cash. For a home under $500,000, the minimum down payment is typically 5%, while more expensive homes require 10% if insured. Non-permanent residents usually put down larger down payments regardless of price.
  • Amortization is how long you’ll need to pay off your mortgage. The amortization is typically broken into smaller terms of 3-5 years, after which you’ll renew your mortgage with new terms.
  • The interest rate is the percentage you page to your lender in interest.

Types of Homes

The type of home you choose may influence its purchase price. The different types of homes for sale in Canada include:

  • Condominiums are part of a larger building or complex. Each unit is owned by an individual buyer, however the land is sits on is owned by the Condominium Company.
  • Single/Detached homes are houses intended for a single family located on its own property. The house doesn’t share walls with other houses.
  • Semi-detached homes are located on their own property, typically with their own yard and separate entrance, but they share a wall with another home.
  • Townhomes are attached to other homes on both sides. These can be freehold or condominiums. 
  • Duplex/Triplex properties are a single home divided into separate units.
  • Freehold properties where you as the owner own the land (typically single detached or semi-detached home but can also include townhouses)
  • Leasehold properties where you as the owner only own the unit and not the land (typically condominiums)

The importance of Location

Location is another factor that affects housing prices. Urban areas are typically more costly than rural locations, but are also more convenient, with easy access to amenities like grocery stores, schools, etc.

Larger cities have significantly higher housing prices than other, smaller cities, so you should adjust your budget accordingly.

Finding a Home in Canada

The path to homeownership in Canada can be difficult for newcomers, especially when you lack a Canadian credit history.

We know that buying a home is challenging, so we created our Rent-to-Own program. We work with you while you live in your home, save money and build good credit to buy it. At the end of your term, you’ll qualify for a mortgage so you can purchase your home from us!

Get Help Buying Your First Home from JAAG Properties

As a newcomer, you have additional barriers to buying a home in Canada, and we want to help. Apply online today to qualify for our Rent-to-Own program!

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