In Ontario, "rent-to-own" is a housing arrangement where a tenant rents a property with the option to purchase it at a later date. It’s an alternative path to homeownership, particularly for people who may not qualify for a mortgage immediately due to credit or financial constraints. You see many Realtors or Mortgage Brokers advertising rent to own on bus signs and on the side of a bus. The always say rent to own is a viable way of buying a property. However a good Realtor will tell you the things you need to consider. Here's how it typically works:

Key Components of Rent-to-Own:

1. Lease Agreement:
   The tenant enters into a lease to rent the property, usually for a fixed period (e.g., 1–5 years). During this time, the tenant pays rent to the property owner.

2. Option to Purchase:
   Alongside the lease, the tenant has an option agreement granting them the right to purchase the property at a pre-agreed price at or before the end of the lease period. This price is determined at the start of the agreement.

3. Option Fee:
   The tenant often pays an upfront, non-refundable "option fee" or "option consideration," which acts as a deposit and is typically applied toward the purchase price if the tenant decides to buy the property.

4. Rent Credits:
   A portion of the monthly rent may be credited toward the down payment or purchase price. For example, if the rent is $2,000, $500 might be allocated toward the future purchase.

5. Purchase Terms:
   The agreement specifies the purchase price, the deadline to exercise the purchase option, and any conditions for buying the home (e.g., securing financing).

Pros of Rent-to-Own:

• Allows tenants to save for a down payment while living in the home.
• Locks in a purchase price, which can be advantageous if property values rise.
• Provides an opportunity to improve credit and financial standing.

Cons of Rent-to-Own:

• The tenant might lose the option fee and rent credits if they decide not to buy or cannot secure financing.
• Higher-than-market rent may be charged to account for rent credits.
• The tenant has limited control over the property until ownership is transferred. 
• Typically the rent to own concept is sold to people with poor credit ratings. The rent to own tenant will have to turn it around during the rent to own period otherwise, when it is time to buy the property, they will not get financing. As a result, they will lose the option fee and rent credits. Basically, nothing is going to change with a rent to own. You still have to qualify for the mortgage. 

Legal Considerations in Ontario:

• Clear Agreements: Agreements should be detailed and compliant with Ontario’s laws, such as the Residential Tenancies Act (RTA), if applicable.
• Consult Professionals: It's crucial to work with a real estate lawyer and possibly a financial advisor to understand the terms and potential risks.
• Due Diligence: Tenants should ensure the property owner has clear title and the right to sell the home.

Rent-to-own can be a viable option for aspiring homeowners, but it's essential to fully understand the terms and risks involved.