Have you recently been declined for a mortgage because you have credit challenges, carrying some debt or dont have the required down payment?

Homeownership could still be a reality with some creative planning and resourcefulness

Understanding the qualification process is the key to finding a way to make it work. The mortgage amount a buyer would qualify for is based on total household income, down payment and money owed to outstanding debts.  Rent to own can work with the debt situation differently than a bank can now since you will have time to pay down your debts while you are in the rent to own term.

If affordability is an issue, here are a few tips that might just help you increase your affordability so you can get into homeownership today!

  1. Increase your down payment amount – you could tap into RRSP’s to increase the cash down payment you have which will increase your affordability.  I always suggest talking to your financial planner, accountant or banker to find out how this might impact you in a rent to own since you will be taxed on the money you take out of the RRSP.  Long term though, paying a small amount of tax now to earn potential equity in your own home might be worth it for some.
  2. Pay down debt where possible – again, this is more for the bank situation but the more debt you can pay down, the more affordability you can get. This doesn’t necessarily apply to rent to own though.
  3. Consider joint ownership or a co-signer – both situations can increase the household income which would raise the level of affordability.
  4. Buy to Rent – think about purchasing something where there is an existing and legal basement apartment.  If you can rent this out and get a signed lease agreement, 50-80% of that rental income can be used to boost your total household income and your affordabilty.
  5. Look in bedroom communities – the Pandemic created a situation where many people started working from home.  Even if it isn’t full-time, many people find themselves working from home 2-4 days a week.  This has opened up the possibility of buying a little further out, in bedroom communities, where prices are lower which has a positive impact on your ability to afford to buy there.  With rent to own, we stress that any home purchased is unlikely to be your dream home but it can support the dream of owning your own home which in turn can fund the next purchase when you sell and enjoy the equity from it.