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There are many reasons why some Canadians prefer to rent over buying a home. For instance, being a homeowner can be very expensive, whereas you might find a decent apartment, house or condo for less than you’d spend on a mortgage.
Nonetheless, you can rack up just as many expenses when you’re a renter. Make sure you avoid these common renter mistakes that could cost you money and time.
Since it can be cheaper to rent, it’s tempting to buy unnecessary things, instead of saving your money.
Most experts say your rental housing costs should add up to less than 30% of your income. Additionally, you should avoid frivolous spending and use your savings for important expenses, such as your:
Although it may not sound essential, renter’s insurance is worth considering, since you never know what can happen. Actually, many renters don’t realize that their landlord is not responsible for any disasters or damages that occur on the property.
For example, if a fire ruins your possessions, it can be a huge relief to have some way of covering your losses. The price of your policy can vary based on your renter’s history and the value of the rental (most are around $30- $50 a month).
Learn more about what type of insurance you should buy.
As of this year, Canadian consumers can have their rent payments reported and therefore help their credit, thanks to Landlord Credit Bureau.
Landlord Credit Bureau (LCB) recently signed an agreement with Equifax, one of Canada’s two main credit reporting agencies. For the first time in Canada, tenants are able to report their monthly rent payments as a credit building exercise, enabling them to build credit for simply paying rent on time.
In turn, you can use LCB’s website to authenticate and rate landlords or build your credit report by requesting that your good payments appear on your credit report. Remember, if your landlord uses LCB, your missed payments will be reported as well.
Check out if you can use your credit card to pay rent.
Before renting, get your credit report from Equifax and TransUnion (different versions are held by both bureaus), then check it for errors or identity fraud. You’re entitled to one free yearly copy of your report, which you can request by phone, mail or online.
At the same time, you can pay a fee to see your credit score, which ranges from 300 – 900 (although you have multiple scores at each bureau):
Here are some other credit elements your landlord could inspect:
Despite the price being a primary concern, don’t forget to consider the environment of the rental property. Here are some important location-based elements to consider:
Remember, you could be renting your dwelling for several years. Don’t hesitate to have a lengthy conversation with the landlord beforehand, so you won’t be caught off guard by any unexpected problems thereafter. Be sure to also ask the following questions:
Tired of renting? Consider a rent to own program.
Another mistake many renters make is failing to do an inspection of the unit. Don’t get fooled by what’s on the surface, as your landlord could force you to pay for any damage or non-permitted modifications, even if they were done by previous tenants.
Before signing your rental agreement, do a walk-through of the dwelling with your landlord and confirm that everything works. Here are some key elements to inspect:
Your landlord may ask for a lease deposit in case anything happens to the rental unit while it’s in your care. The size of your deposit typically depends on how large and valuable the property is but can be at least a few hundred dollars.
Although damaging your unit can cause problems, breaking your rental agreement is even worse. Here’s what your landlord could do if you miss any rent payments:
Unfortunately, some renters also don’t realize what their landlord is responsible for. While there are some provincial/territorial regulations that can apply, your landlord must repair and maintain the following amenities (if they’re included with your rent):
If they weren’t your fault, your landlord may also responsible for:
Are you a landlord? Check out why you should get landlord insurance.
On the other hand, tenants are responsible for:
Thrown off by a need for housing or how nice a unit looks, some renters make the unfortunate mistake of signing their lease without looking it over properly. Here are some of the main elements every good rental agreement should feature:
All this said every lease is different. If the terms of your agreement seem unfair, speak with a financial advisor so you don’t get locked into a rental that you’re unhappy with.
If that’s your goal, it’s best to start researching, so you can find a unit that suits your personal and financial preferences. Who knows? By renting an affordable place, you might be able to save enough for a house someday.
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Loans Canada is pleased to announce it placed No. 131 on the 2022 Report on Business ranking of Canada’s Top Growing Companies.
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