Rent to Own

If you rent to own your home and your financial situation is not in order by the maturity date, you risk losing your investment.

What is Rent to Own?

A unique home financing option is called Rent to Own. It allows someone to get into a home of their choosing who isn’t in a position to obtain a mortgage at present.

The buyback price is determined at the start of a contract so the client knows exactly how much of a mortgage they will need to end the arrangement and have the home transferred into their name.

Main Problem with Rent to Own

The main problem that may arise in a rent to own financing is being able to obtain the mortgage needed. Often someone in a Rent to Own is either unable to get their situation in order by the maturity date of the contract or is unaware of the financing challenges that exist in getting out of the contract. When this happens, this person is at risk of losing the money the have put into the home over the past several months or years.

How to Get Out of a Rent to Own Contract

The two steps to getting out of a Rent to Own contract are as follows:

  • Obtain an appraisal to determine the home’s value
  • Obtain a mortgage for the balance required

The first step in getting out of a Rent to Own contract is to determine what the home is currently worth. Although a buyback price was st at the start, there may be other factors that can alter what the actual value is such as upgrades, repairs, or a stronger than anticipated market appreciation.

An appraisal is a critical starting point to determine a home’s value, and any new lender will require this information as part of their lending conditions.

There will often be credits that have accumulated over the term of the contact, which are used to reduce the purchase price further. Be sure to check the wording of a contract carefully to factor these in.

Once the final net purchase price has been determined and there is an appraised value, the second step is to obtain a mortgage for the balance required, assuming there is sufficient equity.

The Tricky Part of Finalizing a Rent to Own Contract

The tricky part of finalizing a Rent to Own contract is utilizing the existing equity when applying for a mortgage. Most lenders will based the value of a home between the lower of

  • the purchase price; or
  • the appraisal value

This creates an issue in most cases since the purchase price will be the lower of the two as it was set back when the term started. As a result, this prevents any existing equity from being used as a down payment.

A select few equity-based lenders as well as private lenders are more flexible and will base the value from the current appraisal instead of the purchase price. In short, this means that it may be a two-step process to moving the mortgage to a prime lender.

The two steps involved in finalizing a rent to own contract are as follows:

  • Purchase the home with an equity or private lender
  • Refinance the mortgage to a bank or other prime lender

The Graeme Moss Solution

If you’re in a Rent to Own that is approaching maturity and you need to figure out a plan, we can help. We specialize in these situations and know which lenders will consider financing. You don’t want to risk losing your hard-earned money by not being able to purchase the home and having to start from scratch.

Contact us today for a free, confidential review of your situation. We are here to help.

People we’ve helped.

  • I first met Graeme over the phone when we were living in Hamilton and finding it difficult to make our payments. He was so helpful and we knew he genuinely wanted for us to be successful. Ever since, we have gone to him when purchasing a new home or refinancing because we trust him and we know he cares. He always goes above and beyond to help us when we need it. We went from struggling to make payments to living in our dream home in a few short years.  I truly believe that it is because of his knowledge and passion for helping people build their futures that we are where we are today. Thank you, Graeme!!

    M. V. Hamilton, ON
  • Thank you Graeme, for everything you did to help us with our mortgage, for your patience with my questions and professionalism. We truly appreciate yours and Deborah’s efforts on our behalf.  We’ll be sure to recommend you to anyone we know who needs help like we did. Thanks so much for everything.

    J. M. Hamilton ON
  • Graeme Moss has provided stellar customer service and was a key player in ensuring due diligence. It was both a pleasure & very professional dealing with Graeme when I turned to Fair Mortgage Solutions seeking an interim solution.  He, once again was very accurate in advising me, he is not a lawyer. What prompted me to negotiate the legal fees was associated to why this crucial “matter” between legal departments was not finalized in 2017.  Moving forward, Graeme’s diligence directed me immediately to the right department. Your department honoured negotiating and we established completion of the task at hand, the Discharge of the MTG. Thank you!

    K. W. Burlington, ON
  • We refer clients to Graeme who are either having serious financial issues, or are recovering from a bankruptcy or proposal filing. They are challenging situations. I can count on Graeme to treat people with compassion and respect. I trust that if there is a mortgage solution to be found, Graeme will make it happen. He truly cares about people and helps them to succeed.

    Christine Zuk President, Vine and Williams Inc.
  • You and your team are awesome. You truly care and you saved my life. Thank you.

  • This is great. We were so worried. Hearing how others helped who were in a similar situation. This is a godsend. We appreciate the roadmap. Glad it is within 3 days. The advice free, can’t go wrong.

    H.H Mississauga
  • My wife and I were stunned at the speed you got this done. The fee was very low. We are thrilled. Thank you for your help!

    D.H. St. Catharines
  • You guys are friggin awesome! We feel so happy. Thank you so much.

    S.R. Oshawa
  • You have been a godsend. An absolute godsend. I can finally sleep at night. My children thank you. We have 6 options instead of being forced what to do.

    L.E. Mississauga
  • I'm a first time home buyer and had a very positive experience working with Graeme Moss, he gave good advice and made the process very easy.