CMT announced that it has concluded the sale of $250 million of senior medium term notes.
Excellent question! Rent to Own is an excellent program that was developed to help individuals like yourself that may not be able to qualify for a conventional mortgage today. There could be several reasons for why you may not be able to qualify for a mortgage, but the most common reasons are low or bad credit, not enough money for a down payment, haven’t had steady income for 2 or more years, etc. Not to worry, because we can help!
Rent to Own is a program that gets you ready to be qualified for a conventional mortgage, while holding the price of the home for you until we get all your affairs in order. The terms range from 2-4 years ideally, but can go up to 5 years if needed. Throughout the term, your rent does not increase, your landlord will never decide to sell or displace you, you have the luxury of treating the home like your own, you have the freedom to decorate the home, to have pets, to sub-lease or rent the basement, and to make any changes that will increase the value of the home.
Below are a few differences between renting and Rent to Own:
|Rent to Own|
Landlord can sell
|Permission for small changes||Yes|
|Sub-lease or Sub-let||No|
|Changes for improvement||No|
Now, imagine for a second that you are paying $2000/month in Rent. In 3 years, you have basically paid over $72,000 in Rent without getting anything back. I say over $72,000 because the Rent generally goes up every year. $72,000 is a very large amount to have wasted away, without any sort of return or appreciation on this money.
With Rent to Own, you lock in the agreed upon price today, so when the market value for the property goes up in 2-4 years, the appreciation is your profit. It’s basically equity that gets built into the home, and you are eligible for that appreciation 100%!
Imagine, someone gave you an opportunity to buy a house today, with what it was valued 3 years ago….would you say that’s an unbelievable deal? That’s exactly the option that Rent to Own provides you!
The qualification is easy, we look at 3 different things: Income, Credit and Down Payment.
For the process to work flawlessly, you need a minimum of 4%-5% as a down payment of the property value. Meaning, if a property is valued at $300,000, then you will need around $15,000 as a down payment. The reason we ask for this down payment is simple, we want to qualify you for a mortgage at the end of the term. Simply put, you cannot buy a house with 0 down! You can’t even buy a pair of shoes with $0, and this is a home we are talking about…one of the BIGGEST investments of your life!
With the initial 5% put into the property, we save a portion of the rent that you pay every month and put it towards building a bigger down payment. Our goal is to get you as close to 10% of the property value as a down payment, so that we can qualify you for a conventional mortgage. Simple!
As far as credit, even if you have no credit, bad credit or okay credit…we provide a full credit assessment with a customized credit mentoring program and continued and on-going credit coaching. All of this is free of cost to you!
Ready to get started? Perfect! Call us right now and let’s set up an appointment to meet!
The volume of home sales in April touched a seven-year low for the month, the Canadian Real Estate Association said on Tuesday. And home prices in most markets are stagnating.
But if Canada no longer looks like a sellers’ market, buying a home hasn’t exactly become a cakewalk. Unless you’re shopping for a detached house in the country’s two priciest cities, you probably haven’t seen home prices decline.
Renting isn’t cheap either. Forty per cent of the 4.4-million Canadians who have a landlord rather than a mortgage spend over 30 per cent of their pre-tax income to keep a roof over their heads. And things could get worse if rising interest rates and tougher mortgage rules force more Canadians into the rental market.
So, what’s the least bad option in this era of stalling home values and sky-high rents: being a tenant or a homeowner?
Common wisdom has it both ways when it comes to the rent vs. buy question. Many people argue that renting is a waste of money: You’re not building equity in your home and your housing costs will never go down.
Others argue that since rent is usually much cheaper than the carrying costs of owning a comparable home, you can build wealth by investing what you’re saving by not having to pay for things like property taxes and home insurance.
Unfortunately, both arguments can be wrong, depending on your individual situation and the conditions of the market. Crunching some numbers will usually give you a better idea of what renting or buying entail in your specific case.
Rent or buy? The case of a Toronto semi
Toronto is a great place to test the rent vs. buy math. When it comes to larger and more expensive homes, the real-estate craze of the past couple of years has dissipated. At the same time, rents are among the highest in the country.
Let’s look at the example of a three-bedroom, two-bathroom semidetached house, what many would call “a starter home.”
According to data provided to Global News by Toronto real estate website Bungol.ca, the average asking price for such a home in the Greater Toronto Area (GTA) is around $744,000. With a 20 per cent down payment of $148,800, and a five-year fixed rate mortgage of 3.49 per cent, the monthly mortgage payment would be $2,969, according to the online mortgage calculator provided by rate-comparison site RateHub. Add in property taxes, home insurance, utilities and home maintenance costs, and you’re looking at spending $3,800 a month at least.
On the other hand, the average rent for a comparable property is around $2,450 a month in the GTA, according to Bungol. That’s a difference of a whopping $1,350 in monthly costs compared to being a homeowner.
But what does that mean?
Global News run the numbers through the online “rent vs. buy calculator” provided by The Measure of a Plan, a Canadian financial planning site. If you assume that home prices will stay relatively flat for the next 25 years, it doesn’t make much of a difference whether you rent or buy that Toronto semi.
A tenant with an initial investment portfolio of $151,800, equivalent to what the buyer would likely spend on the down payment and purchase transaction costs, would end up with around $1.35 million 25 years down the line, assuming an annual return on investment of 5.5 per cent before inflation.
The homebuyer would end up with roughly that amount in home equity.
Rent or buy? The case of a Toronto condo
When you look at small condos in Toronto right now, those who can afford to buy still seem to have a clear advantage.
The average list price for a two-bed, one-bath apartment in the GTA is around $412,000, according to Bungol, which works out to roughly $2,000 in mortgage payments and $2,650 in carrying costs. Renting a comparable unit, on the other hand, will cost you around $2,330 a month. That’s a mere $320 difference in monthly carrying costs.
Even “a conservative 2 per cent annual property appreciation assumption results in almost $700 of gain per month, over time. That’s quite a bit more than [the] rental savings,” said Robert McLister, founder of rate-comparison site RateSpy.com and mortgage planner at intelliMortgage.com
“In most urban markets, it’s hard to beat buying long-term when your rent payment is higher than your mortgage payment for the same property,” he added in an email to Global News.
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But small towns where few homes are available for lease can also be a tough market for renters, said Jason Heath, a fee-for-service financial planner and managing director at Markham, Ont.-based Objective Financial Partners.
In communities where the supply of rental properties is limited, it’s not uncommon to see yearly rent payments equivalent to between 7 and 10 per cent of the market value of a comparable home.
Generally, if a year’s worth of rent adds up to less than 4 per cent of the market value of a similar house, you’re probably looking at a renters’ market. If yearly rent works out to 5 per cent or more, buying is more likely to be the better option financially, Heath said.
Still, there are all sorts of variables that can skew the calculation. For example, the faster home prices rise, the harder it is for renters’ investment returns to keep up.
On the other hand, you won’t be building much wealth as a homeowner if you keep tapping into your home equity to borrow, Heath noted.
And if you have a generous workplace pension with your employer matching contributions, renting and being able to make larger monthly deposits into your retirement savings account might make more sense, Heath added.
The 4-per cent rule of thumb is only a starting point, he said.
“It’s important just to know when to ask more questions.”