Where your money goes: the three price models
Model 1: the locked price
The purchase price is written into the option agreement on day one and does not move. If the market rises, you buy below market and the gain is effectively yours. If the market falls below the locked price, you may be buying above market and walking away costs you the fee and credits. Locked prices are the easiest model to verify and the one this directory's standard treats as the clearest form of disclosure, because the number is sitting on the card before you ever visit the home.
Model 2: the annual escalator
The price starts at an agreed figure and rises by a fixed percentage each year, commonly in the 2% to 4% range. It mimics a rising market without waiting for one. The risk hides in the compounding: a 4% escalator in a flat market quietly puts your purchase price well above what the home would appraise for and your mortgage lender will lend against the appraised value, not the contract price. The gap comes out of your pocket at closing or the deal fails at the finish line.
Model 3: appraised value at the end
No price is set today. When the term ends, an appraiser values the home and that becomes your price. You carry the full market risk in both directions and you gain certainty about only one thing: you will pay market. This model can be fair when it names the appraisal process in the agreement (who chooses the appraiser, what happens if you dispute the number) and it is a fog machine when it does not. See the red flags guide on fog.
Worked example — illustration only, one home priced three ways
Assumptions, stated: a home worth $700,000 today; 36-month term; option fee $20,000; monthly payment $2,600 with $450 credited each month. Credits over the term total $16,200, so $36,200 stands against the price if you complete.
| Model | Price at month 36 | You finance or pay after credits |
|---|---|---|
| Locked at signing | $700,000 | $663,800 |
| Escalator at 3% per year, compounded | $764,909 | $728,709 |
| Appraised at the end, market flat | $700,000 | $663,800 |
| Appraised at the end, market up about 3% per year | about $764,900 | about $728,700 |
Same home, same family, same payments. The model alone swings the closing figure by roughly $65,000. That is why "how is the final price set" is the first field on every listing card here, not a footnote.
The cost nobody puts on the card: land transfer tax
When you complete the purchase in Ontario you pay provincial land transfer tax on the price, calculated marginally, meaning each rate applies only to the slice of the price inside its bracket. The brackets, from the Ontario Ministry of Finance: 0.5% on the portion up to and including $55,000; 1.0% on the portion above $55,000 up to and including $250,000; 1.5% on the portion above $250,000 up to and including $400,000; 2.0% on the portion above $400,000 up to and including $2,000,000; and 2.5% on the portion above $2,000,000 where the land holds one or two single-family residences. Toronto charges an additional municipal tax on top. It does not apply in Durham Region.
The Ministry's own worked example: on a $400,000 purchase the tax is $275 + $1,950 + $2,250, totalling $4,475. Running the same brackets on the $700,000 example home above gives $10,475, payable at closing on top of your mortgage. A first-time buyer refund of up to $4,000 exists as a separate programme with its own rules. Budget for the tax from the start of your term, not the end of it.
What this guide does not cover
It does not price a specific home or predict what any market will do; the appraisal rows above are arithmetic, not a forecast. It leaves out mortgage insurance premiums, legal fees and the HST treatment of new construction, each of which can apply to a real purchase. Your lawyer and your mortgage broker price your actual closing.
Questions to ask before you sign
- Which of the three models sets my final price and where is that written in the agreement?
- If there is an escalator, what does the price become in each year of the term, in dollars?
- If the price is appraised, who picks the appraiser and what happens if I dispute the value?
- Is my total credited amount, fee plus monthly credits, applied against the price at closing?
- Have the closing costs, including land transfer tax, been estimated for me in writing?
Sources, checked November 2, 2026: Ontario Ministry of Finance, "Calculating Land Transfer Tax" at ontario.ca (brackets effective January 1, 2017 and the $400,000 worked example, reused verbatim). Price-model descriptions reflect the standard structures used by Ontario rent-to-own operators. All example figures are illustrations with their assumptions stated, not quotations.