Option to purchase agreement is entered into by a person who does not qualify for conventional mortgage or financing due to poor credit rating. The tenant signs a contract with property owner wherein he indicates his consent to pay a rent to enjoy the property for a fixed period; at the termination of which the renter gets the exclusive right to take possession of it at a price that has been previously agreed upon.
The tenant is required to pay a non refundable option fee which goes towards the purchase price of property. The tenant then shells out an amount typically equivalent to the rental sum on monthly basis which is inclusive of the option consideration and the mortgage fee owed to the owner.
The renter stands to have his entire option fee forfeited if the desired purchase does not take place. In the event of inability to purchase the property at the expiry of contract, the owner can extend the rental period or convert the lease agreement into a conventional rental contract.
The tenant is required to pay a non refundable option fee which goes towards the purchase price of property. The tenant then shells out an amount typically equivalent to the rental sum on monthly basis which is inclusive of the option consideration and the mortgage fee owed to the owner.
The renter stands to have his entire option fee forfeited if the desired purchase does not take place. In the event of inability to purchase the property at the expiry of contract, the owner can extend the rental period or convert the lease agreement into a conventional rental contract.
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