In January 2023, the Canadian Government announced a ban on foreigners purchasing homes for two years. The new law only applies to foreigners and not Canadian citizens living outside Canada. Canadian citizens and Permanent residents can still purchase property in Canada and Calgary.
With the introduction of this new law, foreigners relocating to Calgary do not need to fear or stress. They have the option of rent to purchase or lease to purchase open to them. Rent-to-own or lease-to-purchase is a financing option that allows potential buyers to rent a property for some time, with the option to purchase it at the end of the rental period. This is a good option for first-time buyers or foreigners who are not yet ready to purchase a property outright.
What Is A Lease To Purchase?
First-time home buyers and foreigners should work with a real estate agent to help them find a property that best suits their needs and budget. In Calgary, several properties are available for rent-to-own or lease-to-purchase, ranging from single-family homes to condominiums. Estate agents typically list these properties on real estate websites.
Here is a brief explanation of how rent-to-own purchases work and why it is a good option for first-time buyers and foreigners trying to purchase real estate or homes in Calgary.
Lease-to-own house purchases, also known as “rent-to-own purchases” or “lease purchases,” involve a lease agreement and an option agreement that allows the tenant to acquire the property within a specified period (usually three years or less) at a price agreed upon today.
Lease-purchase plans is a sensible option in many cases and have a sound economic rationale, which is why they are available. The tenant pays an option fee (typically 1% to 5% of the price), which gives them the right (but not obligation) to purchase the property, and the seller credits this to the purchase price. The tenant also pays fair market rent and an additional rent premium to the seller, which the seller credits to the purchase price.
People Best Suited For The Lease To Own Option
1. First-time buyers or foreigners who do not qualify immediately for a mortgage loan because of credit issues, work issues, insufficient credit for the down payment, etc.
2. First-time buyers with families who prefer living in a larger house, duplex, or townhouse instead of an apartment.
3. First-time buyers who prefer to build on their capital for a sizeable down payment
Essential Lease To Own Tips For First-Time Buyers
It is always best for first-time buyers and foreigners to research all options available regarding rent to own. This way, they familiarize themselves with legal jargon, learn how the real estate market works, and find the best property.
Here are a few typical rent-to-own tips that may assist first-time buyers and foreigners looking to relocate to Calgary.
1. Understand The Terms Of The Rent To Own Agreement
It’s essential to understand the terms of the rental agreement and the purchase option agreement. The home buyer should ensure they understand the rental period length, how much of their rental payment goes towards the purchase price, and what the purchase price is at the end of the rental period.
2. Determine The Market Value Of The Property
Before committing to a rent-to-own or lease-to-purchase option, it’s essential to determine the property’s fair market value. This will help first-time buyers to determine whether the purchase price at the end of the rental period is fair and reasonable.
3. Get A Home Inspection
Like any home purchase, it’s essential to inspect a home before committing to a rent-to-own or lease-to-purchase option. A home inspection goes a long way towards helping a first-time buyer identify any issues with the property that the buyer may need to address before they purchase it.
4. Work With A Real Estate Agent Or Lawyer
It is always best for any property buyer to work with an estate agent or lawyer who has experience with rent-to-own or lease-to-purchase options. They can assist first-time buyers, especially with the ins and outs of the rent-to-own process, and ensure that the home buyer fully understands all of the terms and obligations involved. They can also help home buyers negotiate the lease-to-purchase agreement terms to ensure that it is fair and reasonable.
5. Have A Plan For Financing The Purchase
Buyers should ensure they understand their options and have a plan before committing to a rent-to-own or lease-to-purchase option. It’s essential to have a financing plan for the property purchase at the end of the rental period. The financing plan may involve getting pre-approved for a mortgage or securing other financing options.
6. Consider The Risks And Benefits
Rent-to-own or lease-to-purchase options can offer some benefits, such as building up a down payment while renting, but they also come with some risks. It’s essential to consider the risks and benefits of this financing option before committing to it.
Overall, rent-to-own or lease-to-purchase options suit first-time buyers and foreigners to get a foothold in the Calgary real estate market. Still, they must conduct thorough research and understand all the costs and obligations involved before committing to this financing option.
Despite the increase in interest rates, the property market is still hot in Calgary. Rent to own to a great option for many first-time property buyers and foreigners.