1. How Does Our Lease Purchase Program Work?

You simply lease the home from us and then purchase it at a later predetermined date at a set price. This will provide you enough time to clean up past credit problems, or time to sell another home while you are living in it. A portion of your monthly payment goes towards rent/lease, if and only if you make your payments on time, and the other portion (20%) goes towards the accumulated down payment on the property. All of your monthly option credits and down payment is credited towards the future purchase price of the home.

Click for YouTube Video  HOS Lease Purchase Program.”

2. How much of a down payment do I need?

HOS Financial Offers 3 Programs, the down payment is different with each.

Purchase Files:

For clients with a Credit Score of 620+…we offer Purchase Programs with a starting Down Payment of 3%

For clients with a lower Credit Score…we offer Purchase Programs with a starting Down Payment of 5%

For clients facing Power of Sale or need to Refinance…there should be a minimum of 5% Equity in the Home.

3. If accepted in your program, is there a fee?

If you are accepted into the program, we require an activation fee of $250 plus HST once we are about to start the contracts. As with any financing program there are going to be closing costs. The costs are based on the type of file. Please call us to discuss further.

4. What are some of the reasons I might be declined for your program?

There are really 6 main reasons prospective rent to own tenants are declined.

  •  Insufficient starting Security Deposit of Down Payment. The starting Down Payment or Equity requirements for our program are listed above. Our Down payment requirements are based on our experience as to what is required as Down Payment at the beginning to be successful at the exit of the Rent to Own program.   Coming in with a higher deposit helps build a foundation so there will be a greater level of success to qualify for a mortgage from a bank after our program expires.  And that is our only goal; helping you qualify for that mortgage and buy your home at the end of your Rent to Own term.
  • The house you chose is not in our funding area; it is too rural or specialized.
  • Your time on the job is too short.  We are looking for applicants with more stable employment; minimum of at least 6 months on the job and a combines family income of $45,000 per year.
  • Your income is shy of our minimum requirement for a house of that value.   A good guide is 4.5 time your income and that will give you some idea how much home you would be able to afford.
    ie.  $100,000 (total combined income) X 4.5 =$450,000 (upper limit of home you could afford)
  • You qualify for our program but are not meeting the required deadlines with regards to submitting necessary documents or funds needed.  We only work with those who are 100% committed to the program.  We have to be file complete with our mortgage agent checklist before we can advance the file to the next step.  If you are not, we simply inform you that you are not ready for our program at this time and would encourage you to reapply at another point in time when you are completely committed.
  • Not enough time, we are finding mortgage agents sending in the file with days left before we can waive financing making it impossible to fund on that deal.  We require 4 weeks from being document file complete in order to complete this transaction.  This also included refinance buy back where there is a power of sale situation we can help, but lack the time to complete the deal.

5. My credit isn’t great, can I still qualify?

It really depends on your circumstances since we are not credit driven. We are not like other financial institutions; we want to help you become a homeowner. All we ask is that you are honest when you provide us with your financial information. We measure our success on whether we are eventually able to assist you in qualifying for a conventional mortgage.

6. What if I’m self employed?

We have assisted a number of self-employed people to become home owners. Since the Canadian Government has changed the guidelines to this program making it even harder for good self employed people to qualify, we will be seeing more families enroll into this program.

7. I want into the program but I can’t afford the monthly rent and option payments?

When we underwrite your file, the monthly payments are calculated to be no more than 32% of your combined income.  The banks use up to 35% in their calculations, so we are being ultra conservative when we calculate yours.  Your monthly lease rate are slightly more as you would pay on a new mortgage, when you include property taxes and insurance.  So the payments should be affordable unless the income you reported to us is far from the truth.

If you still think you are paying too high, there is another option. You can decide to purchase a home that has an in-law suite or duplex and use the rental income to offset your monthly payments. For example, if your monthly rent and option payments are $1,700 a month, and the basement in-law suite is rented for $600 a month then you are only responsible to pay the balance of $1,100 a month. We would add 50% of the new rent onto your current income to help in the calculations.

8. Who pays for the regular maintenance of the property?

You are responsible for the upkeep of the property. You will be the direct benefactor from any improvements that you make – it will increase the value of your investment, so you are responsible for the property’s maintenance. Please remember that all homes need regular ongoing maintenance, so you should budget accordingly when considering the monthly payments.  When you first picked this home, you would have called a home inspector and know exactly what is required for that home in advance.

9. What happens if I am unable to make my monthly payment?

You are expected to honour all obligations under the terms and conditions of our lease purchase contract. You are responsible to pay the monthly amount on time. If you fail to do this, you will be considered to be in default under the terms and conditions of the Rent To Own contract. Think of it if you do not pay the mortgage, the bank will seize the house.  If you default, then we reserve the right to immediately start legal proceedings to recover and secure our interests in the property. If this happens, you can potentially lose all equitable interest in the property, including (but not limited to) initial and additional option deposits, and monthly option credits. We will also be entitled to recover any and all legal, property management costs that we may incur. We know this sounds serious. We would like to make you fully aware of all rights and and obligations (both yours and ours) under the terms and conditions of the contract. Please be aware of everything involved in the contract before you sign.

10. Are Property Taxes and Insurance included in my monthly payment?

Yes. We pay all property taxes and the real property insurance. You are required to purchase a resident insurance policy to cover your possessions inside the home. You will be responsible for the utilities, and upkeep on your new home.

11. Who chooses the home?

You do! We let you choose the home you want, in the area you most desire, at a price that fits into your budget. However, we both want to avoid areas where properties are not appreciating. We want you to be in a good neighbourhood with good schools and where property values steadily increase. We are a company that invests in you as much as we invest in the home itself.

12. Is the purchase price of the home negotiable?

The option purchase price will be fixed over the term of the agreement. Regardless of how much the home appreciates in value over the term of the agreement, the purchase price will not change.

13. Who does the home inspection?

We have each home professionally inspected prior to closing and make sure that your home is in good condition and free of hidden problems in all major areas (roof, electrical, heating, cooling, and foundation). The cost of the home inspection is your responsibility.  We only use Pillar to Post for all home inspection and your mortgage agent can call for an appointment on your behalf.

14. Do you do lease purchases for new homes as well as resales?

Due to the HST on rental homes, we are not able to transact on new homes in Ontario.  At this point Home Owner Soon is looking for re-sale home based on MLS, we will consider for sale by owner (FSBO) on a case by case basis.

15. Do you do lease purchase for mobile homes?

The short answer is no, we don’t do rent to owns for mobile homes and nothing on lease or rented land.

16. What happens if I do not want to buy the house at the end of the lease because I am not qualified?

You have a few options if this unfortunate scenario arises. If you need more time to improve credit score, we can extend the lease for another 12 months. A more drastic step is to simply walk away from the deal.  However, we don’t recommend this option as you lose all monies you have paid into the down payment, which is a considerable sum.  And by doing so you have just not only wasted a few years and thousands of dollars of your hard earned money, but you are essentially right back where you started.  We want to deal with committed people and we will work as hard as you to help you buy this house.

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