The beginning of 2023 saw average monthly payments for new mortgages in Canada rise to $1,984. This is an increase of 40% from $1,415 in 2019.
Existing mortgage rates didn’t fare much better. Monthly payments cost $1,515, an increase of 20% compared to $1,277 in 2019.
Rent-to-own homes are a new, more affordable option. They offer lower rates, making them a viable option for those with poor credit.
Read on to learn how to find rent-to-own homes with low monthly payments.
Work With an Agent or Brokerage
Two types of real estate agents may have experience in rent-to-own properties. They include buyers’ and sellers’ agents.
You’ll want to search for a buyer’s agent. They work to help you understand unfamiliar terms and get the best possible deal. This means low monthly payments.
Agents and brokerages may also have dedicated rent-to-own programs. These companies are more like investment firms. They’ll find a property, buy it, set a purchase price, and lease it to you with the right to buy.
Know Where to Look
Having your agent communicate with sellers isn’t the only way to find rent-to-own homes with low monthly payments. There are a wide range of other resources available, including:
- Reluctant landlords
- Foreclosure markets
- Online rent-to-own portals
- Local housing resource centers
Working with your friends and neighbours is another useful but potentially dangerous option. See if they have a property they’re willing to get rid of with low mortgage rates.
Choose the Right Terms
There are two main types of rent-to-own agreements.
- Lease-option means you can buy the property when the lease is up but aren’t obligated to. You will lose upfront, non-refundable fees if you don’t.
- Lease-purchase agreement means you must buy the property when your lease ends. If you don’t, you can lose your deposit, down payment, and any equity you built. You’ll even risk having the seller take legal action against you.
Be careful to choose the right one so you’re not locked into a purchase. Look into the fine print of the rent-to-own agreement to check for any other unwanted terms.
Improve Your Credit and Equity
11% of Canadians believe they have poor credit. At least 50% of them have never checked their credit report.
This affects your ability to get a mortgage and increases your monthly rates. Renting to own with bad credit is a better option than trying to buy.
Work to increase your score while you wait for the option to buy to become available. Pay your bills on time, reduce your debt, and check your credit reports for errors.
You can also build equity in the home to make it more valuable if you need to sell or use it to get a loan or invest. Increase your mortgage payments and perform home improvements.
Are Rent-to-Own Homes With Low Monthly Payments Right For Me?
Rising mortgage rates are a roadblock in achieving the dream of home ownership. Renting seems to be the only solution, but there is a middle ground that combines the two.
Get an agent to help you find rent-to-own homes with low monthly payments. Use every tool at your disposal. Look over the terms of the agreement. Build your credit and equity before and after buying the home.
Read the rest of our content for more tips on finding your ideal property at a low mortgage rate.