Frequently Asked Questions
Frequently Asked Questions
What if I am not able to secure financing at the end of the term?
If, despite your best efforts at becoming “bank-worthy” by the end of the term, traditional financing is still denied to you, there are a number of options available:
First, you can simply extend your term with us and continue on with the program until such time as you become eligible. The interest rate on your deal would have to be adjusted to reflect the prevailing rates at that time.
Second, you can sell the property. As long as the sale price is sufficient to cover the outstanding balance on the mortgage and any early discharge penalty we may incur from our mortgage provider, we will allow it. If the market has gone up during the term, you may actually realize a profit on your sale.
Third, you can rent the property out as long as doing so doesn’t conflict with any Strata bylaws.
Why is the mortgage rate higher than the banks?
There are a couple of reasons for this.
We are a Commercial business and therefore not eligible for the lower interest rates you see banks offering to individuals.
Also, we utilize investor money to supplement your down payment in order to purchase the property. Investors require a return on their capital, so the difference between the interest rate we acquire for your home and the interest rate we charge you goes to the investors as their return.
Is RTO better than trying to save up for a downpayment?
That is a personal decision you have to make.
We have had clients do exactly that, with the end result being them “chasing the market”. The market in the Lower Mainland and throughout much of BC continues to rise, sometimes slowly, sometimes rapidly. It depends on whether or not you think you can save faster than the market rises. An adequate downpayment with us today may be inadequate in a year or two.
Also, no one can say what further obstacles the gov’t and the banks may put in place in the interim. And many people have a lot of trouble not spending the money they have on hand. Expenditures, some necessary, some not, always seem to crop up.
Your listed properties aren’t what I’m looking for, can I rent to own anything else?
Our Rent to Own Program is applicable to any property for sale in the Lower Mainland. Please note that only 5% downpayment is required if the property is one of our own listings, 10-20% downpayment is needed otherwise.
Is it possible to take ownership before the end of the term?
Yes, absolutely! If you qualify for a mortgage before the term is up, you can exercise the Option to Purchase and take title. You must be aware though, that any pre-payment penalty we incur from our mortgage provider will be passed on to you.
What is the mortgage rate going to be?
Due to the current unprecedented and frequent Bank of Canada rate hikes, our interest rate has
increased significantly. As our rates are tied to the Bank rates please be aware that, should these hikes
continue, our rates will be increasing accordingly. As of today, our rate is 8.6% for a 10% down payment.
If I can pay more per month, is that allowed?
The more equity you have in your property at the end of your term, the better. It makes it much easier to qualify for a bank mortgage. Anything over and above the interest portion of your monthly payment comes directly off the principle of the property’s mortgage, so if you can pay more per month it is absolutely allowed and an excellent strategy.
Am I on the title?
No. During the term, we retain the title. However, the contract ensures you have exclusive rights to the property for the duration of the term. At the end of the term, you obtain a bank mortgage, exercise the Option to Purchase and the title is transferred to you.
Can I make lump sum payments against the principle?
Yes, lump sum payments are allowed any time, as many times as you like. There is no penalty or restriction on this.
Do you pay the maintenance fees and property taxes?
Just like a bank, we view you as the owner of the property you are leasing from us. You have all the rights as well as all the responsibilities of a homeowner. So, you can paint rooms, change fixtures, plant a garden etc, but you are also responsible for maintenance fees and property taxes.
Do I need a downpayment?