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Rent to Own Agreements on the Rise in Canada?

With new Canadian mortgage rules coming into effect over the Summer months, a new trend is starting to emerge amongst home sellers. With a higher percentage of the market unable to come up with the necessary down payment for a home, or perhaps they cannot qualify for a certain mortgage, rent to own has increased as an option.

One lawyer in Calgary has noticed an uptick in Agreement for Sale requests.

There are some benefits, obviously affording a home you otherwise would not be able to. However, that would be the biggest drawback–purchasing a home you couldn’t otherwise qualify for through traditional lending means. There are additional reservations about rent to own agreements. Pay attention to what your real-estate lawyer has to say about the prospects and consult a personal financial planner. The rules for rent to own are different and this form of lending is open to abuse.

Using common sense to factor in, “if I couldn’t afford this house with a normal bank, what catch does this ‘rent to own’ lender have up his sleeve?” Knowing all of your options beyond rent to own may save you heartache, or worse, when you miss a payment.

New mortgage rules were put in place for a reason, and the fact many are still trying to purchase homes despite an over inflated market (it’s inflated, the argument is by how much) is a cause for concern. Although Canada sits in a relatively good position in the global economic picture, if enough people enter into agreements that see them lose their largest assets, the economy could deteriorate quickly.

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