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When we say YES! We stand behind our promise.®

Is Rent-to-Own the Right Choice for You? 2018-11-02 14:31:17 Akal Mortgages Is Rent-to-Own the Right Choice for You?

second mortgageMany people in Canada consider home ownership to be an essential part of their financial security. But sometimes, for various reasons people are held back from this dream because they can’t qualify for a traditional mortgage. They feel trapped in a cycle of renting that only goes towards funding some else’s financial security instead of investing in their own. Rent-to-own is one solution that might help such individuals.

What is Rent-to-Own?

Rent-to-Own is a contract under which the applicant selects a home and an investor purchases it. The applicant then rents the home from the investor and signs an Option to Purchase agreement which gives the applicant the exclusive right to buy the home for a set amount after a certain timeframe. The applicant will usually also pay a 2-3% down payment.

Typically applicants for Rent-to-Own tend to fall into one or more of the following three categories:

Little or Poor Credit

New federal mortgage regulations have made it tougher for Canadians to get approved for mortgages. Even if you haven’t abused your credit, it is possible that you simply don’t have enough credit because you haven’t borrowed much in the past.

If you do not have sufficient credit, traditional lenders will often require a much larger down payment – somewhere in the realm of 25-30%. But for the average person, this just isn’t realistic.

Spotty Employment Record

Traditional lenders usually feel pretty comfortable offering a mortgage to someone who has been a full-time permanent employee of the same company for years. But what if you are self-employed and your earnings vary from month to month? What if you are a commissioned salesperson? Or maybe you are newly hired. In these cases, getting a mortgage can be much harder and a Rent-to-Own scenario may make more sense.

Don’t Have a Down Payment

In today’s economy, saving a down payment can be difficult. Many families may find it easier to be part of a forced savings plan that a Rent-to-Own agreement involves.

Is Rent-to-Own Right For You?

If any or all of the scenarios above sound like you, then Rent-to-Own might be a good option. Like other types of mortgages, you can be pre-approved for a certain amount so you will know what price range you need to look for when you go house hunting.

To learn more about Rent-to-Own as well as other lending options, call the team at Akal Mortgages today.

When we say Yes! We stand behind our promise.

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