What is Rent-to-Own Housing?
Rent-to-own homes, also known as lease-option or lease-to-own homes, are an increasingly popular housing option for Canadians looking to buy a home. These types of homes allow renters to live in a property while they work on improving their credit or saving for a down payment, with the option to purchase the home at the end of the lease period.
How Does Rent-to-Own Housing Work in Canada?
In a rent-to-own agreement, the renter pays a higher monthly rent than traditional renting, which will include a portion of the rent being applied towards the down payment. The renter will then have the option to purchase the home at the end of the lease period, typically one to three years, at a pre-agreed price.
Why Would Someone Want To Purchase A Home Through A Rent-to-Own Provider?
One of the major benefits of rent-to-own homes is that they provide an opportunity for renters to become homeowners who may not qualify for a traditional mortgage. Renters can use the time during the lease period to improve their credit score, save for a down payment, or address any other issues that may be preventing them from obtaining a mortgage.
What Are the Main Benefits of Rent-to-Own Housing?
Another benefit of rent-to-own homes is that they offer more stability than traditional renting. Renters are able to establish roots in a community and may even be able to make improvements to the property, such as painting or landscaping, that can increase its value.
What Is The Difference Between A Rent to Company and a Private Rent-to-Own Landlord?
Rent-to-own companies may have a portfolio of properties available for rent-to-own and may have more structured agreements and professional management. They may also allow clients to work with a realtor to find and choose their own home on the market. On the other hand, private landlords may have only one property available for rent-to-own, and the agreement and management may be less formal.
The Benefits of Entering a Rent-to-Own Agreement in Canada
Alternative Means to a Mortgage
One of the major benefits of rent-to-own homes is that they provide an opportunity for renters who may not qualify for a traditional mortgage to become homeowners. Renters can use the time during the lease period to improve their credit score, save for a down payment, or address any other issues that may be preventing them from obtaining a mortgage.
More Stability When Compared to Renting
Another benefit of rent-to-own homes is that they offer more stability than traditional renting. Renters are able to establish roots in a community and may even be able to make improvements to the property, such as painting or landscaping, that can increase its value.
Considerations of a Rent to Home Solution
Different from Traditional Renting
It is important to note that rent-to-own agreements are typically more complex than traditional rental agreements, and it is important for both the renter and the homeowner to fully understand the terms of the rent-to-own agreement before signing on. Some important considerations include the length of the lease period, the purchase price of the home, and any penalties for breaking the agreement.
Potential for Increased Down Payment
Home buyers should also be aware that rent-to-own homes may require a higher down payment or higher monthly rent payments than traditional rental properties. Additionally, rent-to-own agreements may not be available in all areas, so it is important for buyers to research their options in their desired location.
Rent-to-Own Provides More Options for Canadians
Overall, rent-to-own homes can be a great option for Canadians looking to become homeowners but may have trouble obtaining a traditional mortgage. By providing an opportunity to improve credit and save for a down payment, rent-to-own homes can help renters achieve the goal of homeownership. However, it is important for both parties to fully understand the terms of the agreement and for buyers to research their options in their desired location.
Let Us Help Find You a Home
At JAAG Properties, we want to help find the perfect home for you. Contact us today for more information on buying a house in Canada through our Rent to Home Solution or to speak with one of our team members.
