***Rent to Own Agreements.
Purchasing a new home in today’s real estate market has caused many difficulties for Canadians. Whether the challenges are due to the increasing interest rates, lack of funds to support a down payment, etc., buyers should be excited with a new route to home ownership through “Rent-to-own” agreements.
What are rent-to-own agreement? Recently, real estate start-ups have offered a solution for prospective home buyers faced with financial challenges through a rent-to-own model. Real-estate start-ups are offering buyers the option to buy homes subject to paying rent for an agreed upon term.
How does a rent-to-own agreement work? Typically, the agreed upon rent includes a premium that is allocated toward the down payment of the subject property. When the buyer is financially prepared and able to qualify for satisfactory financing, they are able to buy the property at a guaranteed price at the end of the rent term.
Types of a rent-to-own agreements? There are two types of rent-to-own agreements: (1) lease options and (2) lease purchase. A lease option contract is generally the safer choice because if the buyer no longer wishes to buy the home at the end of the lease, they are not obliged to purchase the home and can move out without any legal issues. However, if the client signs a lease purchase contract, they are obligated to buy the property when the rent term expires.
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