For many Canadian families, the traditional path to homeownership (PTHO) involves getting a mortgage from a lending institution, most often a bank, to finance the purchase of a new house. One of the most essential requirements for a mortgage is having cash on hand for a downpayment and a good credit score to prove to the lender that the borrower can pay. Data from the Canadian Real Estate Association shows that the average house price grew from CAD402,000 to CAD718,000 (78.6%) over the past 10 years, meaning the dream of homeownership is becoming more challenging for most Canadians.
Fortunately, those who cannot qualify for traditional mortgages can look for a rent-to-own agreement, which acts as a bridge between renting and owning a home. Rent-to-own allows individuals or families unable to own a home for various reasons, such as a bruised credit score, new immigrants to Canada, self-employment, and insufficient down payment/equity, to work toward achieving this dream over time.
Since 2005, Home Owner Soon (HOS) Financial, Inc. has worked with countless families across Canada to help them pursue their dream of homeownership through its rent-to-own program, making it one of the largest and most established providers in its field. HOS was established by a group of mortgage brokers who saw Canadians’ struggles in navigating the traditional mortgage system. Seeing this unmet need, they created HOS and its client-first rent-to-own model, linking aspiring homeowners and socially-minded investors who want to contribute to solving the burgeoning housing crisis.
According to HOS Financial CEO Jeff Belanger, the company’s client-first model differentiates it from other rent-to-own providers in the market. Their win-win strategy seeks to pair families passionate about owning their homes with socially responsible investors eager to help these families on their personalized path to homeownership. However, success in the program depends on participants meeting specific requirements, following the program guidelines, and completing all necessary steps.
Furthermore, most rent-to-own agreements allow the tenant to buy the property before the lease expires, creating a risk that they will not purchase the property, meaning the rent-to-own agreement may not result in homeownership. HOS’ core values are to ensure affordability and an exit strategy for families. Through its advanced screening and underwriting processes, HOS prepares a personalized exit strategy for the client, culminating in a purchase and sale agreement that is scheduled at a predetermined date and price in the future, usually three to five years later. While HOS works to mitigate risks for investors by preparing clients as thoroughly as possible, the final outcome depends on each client’s financial progress and adherence to the program.
The HOS team collaborates with tenants to help them become ‘bank-ready’ by the end of the rent-to-own period. This includes providing guidance on cleaning up past credit problems and improving their credit profile to help them meet mortgage guidelines. HOS’s program also includes a way for tenants to save so they can work toward affording the required down payment for their future mortgage. These tools and resources are designed to increase the likelihood of success, though results may vary depending on individual circumstances.
As tenants utilize tools and resources under their PTHO program and improve their financial profile to bank standards, HOS’ Investors have the opportunity to receive a passive investment, which may yield high monthly cashflow and above-average investment returns. However, as with all investments, returns are not guaranteed and depend on market conditions and individual agreements.
“Honesty and commitment are paramount for our clients,” Belanger says. “We make sure to work with clients that are truly passionate about homeownership. We dedicate a large amount of resources and effort to help clients pursue homeownership, but they also need to have the passion and the drive to fully participate in this program.”
According to Belanger, there are many families who have encountered unexpected financial challenges, and they’re getting foreclosed on and evicted from their homes. HOS has a Rescue Refinance Program, which further differentiates it from other rent-to-own providers. In this program, HOS works with its investors and a trusted network of legal and financial partners to help keep families in their homes, use their existing equity to eliminate debt, and stop the Power of Sale or Foreclosure process.
Moving forward, HOS aims to increase awareness of the rent-to-own model, helping more families who are unable to qualify for mortgages work toward eventually meeting these requirements while living in the house they desire. This includes growing its network of socially minded investors who agree with HOS’ vision of democratizing homeownership.
“Our model is a viable and ethical solution for families to work toward owning their own homes,” Belanger says. “To help more Canadians reap the potential benefits of rent-to-own, we want to spread awareness of how the model is a socially responsible method of wealth creation and demonstrate its repeatability, which we believe will help retain and grow our network of like-minded investors.”
Disclaimer: This content is for informational purposes only and is not intended as financial advice, nor does it replace professional financial advice, investment advice, or any other type of advice. You should seek the advice of a qualified financial advisor or other professional before making any financial decisions.
Published by: Khy Talara
