Rent To Own: FAQ
We understand that buying a home is one of the most important decisions in life and can be your greatest investment. We also understand that life happens, and sometimes you need that extra support to get up on your feet or to get started. Below are some frequently asked questions about our Rent-To-Own Program. It should cover most of the elements of how it works and what we do to help you achieve desired home-ownership.
Q: WHAT IS RENT-TO-OWN?
It’s essentially a house leasing program with a customized plan that allows you to move into a permanent home of your choice for a set rental price, while having an option to purchase it in the future at a guaranteed predetermined sale price at a set date. In other words, you lock in the future purchase price of the home you aim to own at the end of the program. In case the value of the property is higher than agreed upon Future Price – you get to benefit from market appreciation. It allows you to pick and live in your house today, while working on your credit and finances to transition to home-ownership at the end of term at a known price – so no surprises at the end.
Q: HOW DOES RENT-TO-OWN WORK?
We help you move into a home of your choice in 1-3 months once accepted into the program. With an experienced mortgage specialist’s help, we determine a budget you can qualify for in the future from one of the lenders we work with. Required is an initial deposit towards your new home to get started, which will be applied to the future purchase of the home. We work with you to build your final deposit with flexible “deposit saving” options to ensure successful home ownership at the end. Once you’ve selected a property within that budget, we will acquire the property. You then get to live in the property you selected while working on your credit score and finances. At the end of the term when our mortgage specialist approves you for the financing, you become a proud home owner. Congratulations!
Q: HOW DO YOU DETERMINE THE FUTURE PURCHASE PRICE?
We normally take the market appreciation statistics of the selected area and property type as our reference; however, we try to be conservative and scale the mark up down to 3% – which is a historically average stable natural growth of the housing prices. In case the value of the property is higher than agreed upon Future Price, just like we’ve been experiencing in the Greater Vancouver District – you get to benefit from the market appreciation.
Q: WHAT WILL MY MONTHLY PAYMENTS INCLUDE?
Your responsibilities include: making monthly payments on time, obtaining content insurance, pay the utility bills, keeping up the maintenance of your new home, Enjoying your new home!
While our monthly payments include: strata and rent payments, building insurance, property taxes, lease option credits
Q: HOW DOES “DEPOSIT SAVING” PLAN (“LEASE OPTION CREDITS”) WORK?
A portion of your monthly payments will be put aside every month and credited towards the purchase at the end of Rent-to-Own term. For example, your monthly lease option credit is $300, which means that at the end of a 3 year-term you will have $10,800 additional savings (36 X $300). The amount of the monthly credit is determined based on your individual situation and goals.
Q: HOW LONG IS THE RENT-TO-OWN PROGRAM?
Typically the program term can range anywhere between 2 to 5 years. Since everyone’s circumstances are different, the length of the program may depend on the time needed to improve your credit score to 680 and/or accumulate your income history, save up minimum down payment;
Q: WHO SHOULD CONSIDER A RENT-TO-OWN PROGRAM?
- Entrepreneurs, or self employed building up employment record
- Families with imperfect credit
- New graduates/new career paths
- People new to the country
- Saving for up a full down payment required by the banks
Q: HOW DO I GET QUALIFIED FOR THE PROGRAM?
There is an online questionnaire that needs to be filled out and an initial consultation, where we can answer all of your questions and get to know you better. Once we have reviewed your application, a mortgage specialist will get in touch to learn more about your specific situation. The following aspects are high in the priority list in the approval process:
1) Motivation and Commitment – You can only benefit from the program as much as you follow it, and we like to see you succeed!
2) Sufficient Option Deposit (a.k.a. Down payment) – is required (min 3-4% of property value)
3) Supported Income – We want to ensure that your household income can sustain the expense level of your future home. if there is a gap, we need to work on how to bridge it.
***During the approval process, our goal is not to determine if this program is for you or not, rather is to find out when is a good time to start the program.***
Q: WHAT ARE THE BENEFITS FOR ME TO JOIN A RENT-TO-OWN PROGRAM?
- Being home-owner “in training”
- Very little risk and no obligation to buy
- Immediate control and possession of the property
- Future purchase price is definite and tenant benefits from additional appreciation
- The financial leverage is increased while the risk is reduced
- Option consideration is small compared to the property’s value
- Rent payment are fixed for the duration of contract
- Sufficient time to accumulate the balance of the down payment
- Gaining professional assistance with credit advice
- Pride in Homeownership
Q: DO I HAVE TO PICK MY FUTURE HOME FROM YOUR LISTINGS?
No. Your home is your choice. Any property from the market that fits your budget, allows rentals, and is free of any problems, like risk of leaky condos, grow-ops etc. Our real estate specialist will help you make the right decision in that regard.
Q: WHAT ARE THE FEES OF ENROLLING INTO YOUR RENT-TO-OWN PROGRAM?
Essentially we don’t charge you fees. After your application form has been approved, a budget and draft payment plan will be provided for your review. If you decide to join the program, a refundable “initial option credit” of $1,000 will be required, the remaining will only be payable after you’ve found your home. That deposit will be used towards your purchase. If
Q: WHAT HAPPENS IF I CHOOSE TO BACK OUT OF THE PROGRAM BEFORE THE TERM ENDS?
You are allowed to opt out of the program before the end of the term; however the initial deposit and monthly credits will be forfeited, only in special circumstances a partial refund can be issued, as we will now need to cover the cost of turning the property around. This is a possibility that you should assess carefully when entering into the program. Although, we work a proven system and have a strict qualification process to make sure we set you up for success, you will need commitment and a strong desire to achieve the goal of homeownership.
Q: WHO IS INVOLVED IN THE RENT-TO-OWN PROCESS?
Throughout the program, you will be working with a team of professionals including: Property Consultants; Experienced Real Estate Agents; Experienced Mortgage Specialists; Lawyers; and Investors.
Q: HOW AM I PROTECTED IN THE PROCESS?
Our goal is to provide a smooth and transparent experience with successful exit. Your interest is protected through a number of ways, including:
Registering of legal contracts on title;
Independent legal advice;
Executing all contracts through an experienced real estate lawyer;
Quarterly follow-up to ensure you are on track towards your goal;
Providing you transparent communication, market data ;
Working with independent and credible mortgage specialists;
No hidden costs or fees; and
Always having your best interest in mind!
Q: WHAT IS THE PROCESS AND HOW DO I START?
You can begin the process by contacting us and fill out an online questionnaire. Once we have reviewed your application, a mortgage specialist will get in touch to learn more about your specific situation. Once you are approved and decide to move forward with the program, we will develop a customized plan suitable for your unique circumstance and review it together making necessary adjustments so that you have a clear path to proud home-ownership.