Rent-to-Own/Home Rescue FAQ (Frequently Asked Questions):
1. How Does Your Rent To Own Toronto Program Work?
You rent/lease the home from us and then purchase it at a later predetermined date at a set price. This in turn gives you time to save up for a larger down payment, time to clean up past credit problems, or time to sell another home while you are living in it. A portion of your monthly payment goes towards rent/lease, if and only if you make your payments on time, and the other portion (20%) goes towards the accumulated down payment on the property. All of your monthly option credits and down payment is credited towards the future purchase price of the home.
2. What's the difference between the Rent to own and the Home Rescue Program?
Our Rent to own program is not property specific, thus you can even use your existing home as your Rent to own property.
Homeowners usually do this when they get behind in the mortgage or have trouble making payments.
This will save their home from Power of Sale or Foreclosure, and allow them to remain in their home.
This unique characteristic enable the program to become a Home Rescue program too, provided that the property meets our criteria.
3. What do I need to qualify for the program?
At the very least, you need a stable job and strong income. You would also need 3- 5% down payment and the property you choose has to meet certain criteria. Poor credit, Low beacon score due to late payments, collections writs and judgment, and even absence of credit will not disqualify you for the program.
4. How much of a down payment do I need?
We require a minimum of 10% equity for refinance deals and a minimum down payment of 5% of the purchase price for major cities and 10% for rural or small town properties. Of course the more you have, the better it is for you since this is your foundation for your mortgage application in the future. Plus the more down payment you provide, the lower the lease rate drops.
5. If accepted in your program, do I require a deposit?
If you are accepted into the rent to own program, we require an initial deposit of $500.
There are 3 reasons we need this.
First, it is required to obtain the Intent to Lease application. We find that this separates those who are really serious about doing the program from those who are simply inquiring. Second, this is also used as the first installment in a series of payments toward the completion of the security deposit. In other words, this $500 later goes toward the down payment that you must also provide. Third, advancing the $500 allows us to assign a Realtor to start the search process.
6. What are some of the reasons I might be declined for your Rent to Own program?
There are 6 main reasons prospective rent to own tenants are declined.
7. My credit isn’t great, can I still qualify?
Yes! We are not credit driven. We are not like other financial institutions; we want to help you become a homeowner. All we ask is that you are honest when you provide us with your financial information. We measure our success on whether we are eventually able to assist you in qualifying for a conventional mortgage.
8. What if I’m self employed?
We have assisted a number of self-employed people to become home owners. Since CMHC has changed the guidelines to this program making it even harder for good credit people to qualify, we will be seeing more families enroll into this program.
9. I want in to the program but I can’t afford the monthly rent and option payments?
When we underwrite your file, the monthly payments are calculated to be no more than 30% of your combined income. The banks use 32% in their calculations, so we are being ultra conservative when we calculate yours. Your monthly lease rates are slightly more as you would pay on a new mortgage, when you include property taxes and insurance. So the payments should be affordable unless the income you reported to us is far from the truth.
If you still think you are paying too high, there is another option. You can decide to purchase a home that has an in-law suite or duplex and use the rental income to offset your monthly payments. For example, if your monthly rent and option payments are $1,700 a month, and the basement in-law suite is rented for $600 a month then you are only responsible to pay the balance of $1,100 a month. We would add 50% of the new rent onto your current income to help in the calculations.
10. Who pays for the regular maintenance of the property?
You are responsible for the upkeep of the property. You will be the direct benefactor from any improvements that you make – it will increase the value of your investment, so you are responsible for the property’s maintenance. Please remember that all homes need regular ongoing maintenance, so you should budget accordingly when considering the monthly payments. This is why we require a Home Inspection, so you can know exactly what is required for your home in advance.
11. What happens if I am unable to make my monthly payment?
You are expected to honour all obligations under the terms and conditions of our Rent To Own contract. This includes paying the monthly amount on time. If you fail to do this, you will be considered in default under the terms and conditions of the Rent To Own contract. In the unfortunate situation where this happens, we reserve the right to immediately start legal proceedings to recover and secure our interests in the property. This can cause you to potentially lose all equitable interest in the property, including (but not limited to) initial and additional option deposits, and monthly option credits. We will also be entitled to recover any and all legal and property management costs that we may incur. We know this sounds serious. We would like to make you fully aware of all rights and and obligations (both yours and ours) under the terms and conditions of the contract. Please be aware of everything involved in the contract before you sign.
12. Are Property Taxes and Insurance included in my monthly payment?
Yes. We pay all property taxes and the real property insurance. You are required to purchase a resident insurance policy to cover your possessions inside the home. You will be responsible for the utilities, and upkeep on your new home.
13. Who chooses the home?
You do! We let you choose the home you want, in the area you most desire, at a price that fits into your budget. However, we both want to avoid areas where properties are not appreciating. We want you to be in a good neighbourhood with good schools and where property values steadily increase. We are a company that invests in you as much as we invest in the home itself.
14. Is the purchase price of the home negotiable?
The option purchase price will be fixed over the term of the agreement. Regardless of how much the home appreciates in value over the term of the agreement, the purchase price will not change.
15. Who does the Home Inspection?
We have each home professionally inspected prior to closing and make sure that your home is in good condition and free of hidden problems in all major areas (roof, electrical, heating, cooling, and foundation). The cost of the home inspection is your responsibility.
We only use Certified Home Inspectors for all home inspections. Your mortgage agent can call for an appointment on your behalf.
16. Does the program apply to new homes as well as resales?
With the new HST being applied to all new home transactions making it unaffordable, all new home sales has been cancelled.
At this point we are only accepting resale homes on the MLS. We will consider for sale by owner (FSBO) on a case by case basis.
17. Does the program apply to mobile homes?
The short answer is no, we don’t do rent to own for mobile homes, and nothing on lease or rented land.
18. How can I be sure that I will be qualified to purchase the house at the end of the term?
To best ensure that you will be financially prepared and qualified at the end of the term, we refer you to a third party credit rebuilding program that runs for a period of 24 months and will provide you a personal coach for 30 minutes per month for a nominal monthly charge. They will help you build up and monitor a couple of trade lines and to establish enough credit history and beacon score requirements to satisfy CMHC and lenders guidelines at the end of the term.This program is crucial for the success of the rent / lease to own program. Once you have reached the goal of 650 plus beacon score, you will now be able to secure financing through all of the major lenders that are available. What is more important is the fact that you have allowed yourself to break the pattern of bruised credit and are being able to rebuild your financial future that will allow you to qualify for low rates and specials that you were unable to qualify for in the past.
19. What happens if I do not want to buy the house at the end of the lease because I am not qualified?
You have few options if this unfortunate scenario arises. If you need more time to improve your credit score, we can extend the lease for another 3 to 6 months.
A more drastic step is to simply walk away from the deal. However, we don’t recommend this option. In addition to losing all the monies you have paid into the down payment, which is a considerable sum, you will have wasted a lot of time and effort with nothing to show for it, and you will be right back where you started.
We will work as hard as you to help you rent-to-own your dream home, but only if you're committed to making it a reality.
20. How Do I get started?
Fill out our Online Application Form and we will contact you within 24-48 hrs.
Have more questions or need clarification?
Contact Us for more information
1. How Does Your Rent To Own Toronto Program Work?
You rent/lease the home from us and then purchase it at a later predetermined date at a set price. This in turn gives you time to save up for a larger down payment, time to clean up past credit problems, or time to sell another home while you are living in it. A portion of your monthly payment goes towards rent/lease, if and only if you make your payments on time, and the other portion (20%) goes towards the accumulated down payment on the property. All of your monthly option credits and down payment is credited towards the future purchase price of the home.
2. What's the difference between the Rent to own and the Home Rescue Program?
Our Rent to own program is not property specific, thus you can even use your existing home as your Rent to own property.
Homeowners usually do this when they get behind in the mortgage or have trouble making payments.
This will save their home from Power of Sale or Foreclosure, and allow them to remain in their home.
This unique characteristic enable the program to become a Home Rescue program too, provided that the property meets our criteria.
3. What do I need to qualify for the program?
At the very least, you need a stable job and strong income. You would also need 3- 5% down payment and the property you choose has to meet certain criteria. Poor credit, Low beacon score due to late payments, collections writs and judgment, and even absence of credit will not disqualify you for the program.
4. How much of a down payment do I need?
We require a minimum of 10% equity for refinance deals and a minimum down payment of 5% of the purchase price for major cities and 10% for rural or small town properties. Of course the more you have, the better it is for you since this is your foundation for your mortgage application in the future. Plus the more down payment you provide, the lower the lease rate drops.
5. If accepted in your program, do I require a deposit?
If you are accepted into the rent to own program, we require an initial deposit of $500.
There are 3 reasons we need this.
First, it is required to obtain the Intent to Lease application. We find that this separates those who are really serious about doing the program from those who are simply inquiring. Second, this is also used as the first installment in a series of payments toward the completion of the security deposit. In other words, this $500 later goes toward the down payment that you must also provide. Third, advancing the $500 allows us to assign a Realtor to start the search process.
6. What are some of the reasons I might be declined for your Rent to Own program?
There are 6 main reasons prospective rent to own tenants are declined.
- Lack of an adequate down payment: Our program requires more of a security deposit than other companies tend to ask for. Our reasons for this are simple. We want our tenants to become homeowners within 2 years or more. Letting you come in with no down payment, or a paltry amount between 1 to 3% (of the purchase price of the home) simply lines the investors' pockets and not yours, because this may cause you to be in a default situation at the end of the term because you do not have enough down payment. Coming in with a higher deposit helps build a foundation so there will be a greater level of success to qualify for a mortgage from a bank after our program expires. And that fulfills our goal; helping you qualify for that mortgage so you can own your own home outright.
- The house you chose is not in our funding area; it may be too rural or specialized: We stick to the major cities and no more than 45 kms away from population of 5,000 or more. (No Quebec at the moment)
- Your time on the job is too short: We are looking for applicants with stable employment; minimum of at least 6 months on the job and a combined family income of $45,000 or more per year.
- Your income is below our minimum requirement for a house of that value: A good guide is 3 times your income. That will give you an idea how much home you would be able to afford.
ie. $100,000 (total combined income) X 3 =$300,000 (upper limit of home you could afford)
- You qualify for our program but are not meeting the required deadlines in submitting the necessary documents and funds needed: We only work with those who are 100% committed to the program. We have to be "file complete" with our mortgage agent checklist before we can advance the file to the next step. If you are not, we simply inform you that you are not ready for our program at this time and would encourage you to reapply at another point in time when you are completely committed.
- Not enough time: Sometimes we receive a file with days left before we can waive financing, making it impossible to fund the deal. We require 4 weeks from being document file complete in order to complete the transaction. This includes refinance buy back where there is a power of sale situation. We can help, but need enough time to complete the deal.
7. My credit isn’t great, can I still qualify?
Yes! We are not credit driven. We are not like other financial institutions; we want to help you become a homeowner. All we ask is that you are honest when you provide us with your financial information. We measure our success on whether we are eventually able to assist you in qualifying for a conventional mortgage.
8. What if I’m self employed?
We have assisted a number of self-employed people to become home owners. Since CMHC has changed the guidelines to this program making it even harder for good credit people to qualify, we will be seeing more families enroll into this program.
9. I want in to the program but I can’t afford the monthly rent and option payments?
When we underwrite your file, the monthly payments are calculated to be no more than 30% of your combined income. The banks use 32% in their calculations, so we are being ultra conservative when we calculate yours. Your monthly lease rates are slightly more as you would pay on a new mortgage, when you include property taxes and insurance. So the payments should be affordable unless the income you reported to us is far from the truth.
If you still think you are paying too high, there is another option. You can decide to purchase a home that has an in-law suite or duplex and use the rental income to offset your monthly payments. For example, if your monthly rent and option payments are $1,700 a month, and the basement in-law suite is rented for $600 a month then you are only responsible to pay the balance of $1,100 a month. We would add 50% of the new rent onto your current income to help in the calculations.
10. Who pays for the regular maintenance of the property?
You are responsible for the upkeep of the property. You will be the direct benefactor from any improvements that you make – it will increase the value of your investment, so you are responsible for the property’s maintenance. Please remember that all homes need regular ongoing maintenance, so you should budget accordingly when considering the monthly payments. This is why we require a Home Inspection, so you can know exactly what is required for your home in advance.
11. What happens if I am unable to make my monthly payment?
You are expected to honour all obligations under the terms and conditions of our Rent To Own contract. This includes paying the monthly amount on time. If you fail to do this, you will be considered in default under the terms and conditions of the Rent To Own contract. In the unfortunate situation where this happens, we reserve the right to immediately start legal proceedings to recover and secure our interests in the property. This can cause you to potentially lose all equitable interest in the property, including (but not limited to) initial and additional option deposits, and monthly option credits. We will also be entitled to recover any and all legal and property management costs that we may incur. We know this sounds serious. We would like to make you fully aware of all rights and and obligations (both yours and ours) under the terms and conditions of the contract. Please be aware of everything involved in the contract before you sign.
12. Are Property Taxes and Insurance included in my monthly payment?
Yes. We pay all property taxes and the real property insurance. You are required to purchase a resident insurance policy to cover your possessions inside the home. You will be responsible for the utilities, and upkeep on your new home.
13. Who chooses the home?
You do! We let you choose the home you want, in the area you most desire, at a price that fits into your budget. However, we both want to avoid areas where properties are not appreciating. We want you to be in a good neighbourhood with good schools and where property values steadily increase. We are a company that invests in you as much as we invest in the home itself.
14. Is the purchase price of the home negotiable?
The option purchase price will be fixed over the term of the agreement. Regardless of how much the home appreciates in value over the term of the agreement, the purchase price will not change.
15. Who does the Home Inspection?
We have each home professionally inspected prior to closing and make sure that your home is in good condition and free of hidden problems in all major areas (roof, electrical, heating, cooling, and foundation). The cost of the home inspection is your responsibility.
We only use Certified Home Inspectors for all home inspections. Your mortgage agent can call for an appointment on your behalf.
16. Does the program apply to new homes as well as resales?
With the new HST being applied to all new home transactions making it unaffordable, all new home sales has been cancelled.
At this point we are only accepting resale homes on the MLS. We will consider for sale by owner (FSBO) on a case by case basis.
17. Does the program apply to mobile homes?
The short answer is no, we don’t do rent to own for mobile homes, and nothing on lease or rented land.
18. How can I be sure that I will be qualified to purchase the house at the end of the term?
To best ensure that you will be financially prepared and qualified at the end of the term, we refer you to a third party credit rebuilding program that runs for a period of 24 months and will provide you a personal coach for 30 minutes per month for a nominal monthly charge. They will help you build up and monitor a couple of trade lines and to establish enough credit history and beacon score requirements to satisfy CMHC and lenders guidelines at the end of the term.This program is crucial for the success of the rent / lease to own program. Once you have reached the goal of 650 plus beacon score, you will now be able to secure financing through all of the major lenders that are available. What is more important is the fact that you have allowed yourself to break the pattern of bruised credit and are being able to rebuild your financial future that will allow you to qualify for low rates and specials that you were unable to qualify for in the past.
19. What happens if I do not want to buy the house at the end of the lease because I am not qualified?
You have few options if this unfortunate scenario arises. If you need more time to improve your credit score, we can extend the lease for another 3 to 6 months.
A more drastic step is to simply walk away from the deal. However, we don’t recommend this option. In addition to losing all the monies you have paid into the down payment, which is a considerable sum, you will have wasted a lot of time and effort with nothing to show for it, and you will be right back where you started.
We will work as hard as you to help you rent-to-own your dream home, but only if you're committed to making it a reality.
20. How Do I get started?
Fill out our Online Application Form and we will contact you within 24-48 hrs.
Have more questions or need clarification?
Contact Us for more information
Real Mortgage Associates
Brokerage FSCO Lic#: 10464 Phone: 1(877) 677-7778 |