Rent or Own?
Coming to Canada?Renting or owning your accommodations: some considerations
Before you start looking at houses and apartments, the Financial Consumer Agency of Canada (FCAC) recommends that you check your credit report and credit score, since they may affect your options. Some financial institutions might recognize your credit history from your home country, but you will generally have to build a Canadian credit history to get a loan or a mortgage. You can order a copy of your credit report and credit score free of charge from one of Canada’s two credit reporting agencies, Equifax and TransUnion. If you don’t have a credit history, you can start to build a good one by getting a credit card and using it wisely, not taking on more credit than you can afford and paying the balance in full every month. FCAC’s publication Understanding Your Credit Report and Credit Score explains how to get and understand your credit report and credit score, and includes tips on how to use credit wisely and build a good credit history.
Next, you will need to decide whether to rent or buy a home. Renting usually costs less than buying a home, and it usually takes less time to find and move into rental accommodation than to buy a home. When making this decision, ask yourself:
• How much can you afford? Do you have enough money to buy a home, or will you need a mortgage (more on mortgages below)? How much can you afford to pay per month for housing?
• Are you confident in your ability to do maintenance and repairs to a home? Landlords or property owners are usually responsible for maintenance of a rental unit.
• How long do you plan to stay in one community? If you are not sure about the location in Canada you want to live in, renting may be best for you.
If you decide to rent a home, you will probably sign a rental agreement, or lease. This is a contract between a landlord and a tenant, outlining the monthly rent and the landlord’s and the tenant’s rights and responsibilities. Make sure you get your rental agreement in writing as a record of what you and the landlord have agreed to. If there is a dispute later, the written record may help to settle it. FCAC’s Rental Agreements web page has more details on what should be in a rental agreement.
Owning a home
Buying a home involves costs in addition to the purchase price, such as real estate agent fees, legal fees, property taxes and home maintenance. FCAC’s Owning a Home guide outlines all these and offers tips to help you minimize your costs.
Most people who buy homes in Canada get a mortgage, a type of loan secured by the home itself. Mortgages 101: Buying Your First Home provides a step-by-step guide to finding the mortgage that best meets your needs, including tips on how to shop around for the best mortgage for you. It explains important terms like down payment, amortization periods, terms, and fixed and variable interest rates. It also shows you how to negotiate with financial institutions to get the mortgage that suits your situation.
Use FCAC’s Mortgage Qualifier tool to find out what kind of mortgage you could qualify for with your income. Plug in the mortgage amount, interest rate, amortization period, payment frequency and term into FCAC’s Mortgage Calculator tool to see how much your payments will be.
How to make a moving budget
Whether you buy or rent, you’ll have to pay security deposits, connection fees, movers and more. The Moving Out on Your Own guide lists all the “start-up” expenses, including moving, outfitting your new home, legal fees and fees for new accounts for utilities. Renters will probably have to pay a security deposit equal to one month’s rent, as well. Ongoing costs include utilities such as electricity, water, telephone, cable television and Internet connections, as well as insurance, parking, maintenance and taxes.
The Moving Out on Your Own guide also has tips on reducing the costs of moving. Worksheets list all the different costs and help you keep track of what you’re spending.
FCAC’s Buying and Maintaining a Home guide can help you see how your expenses might change after you move into your new home, whether you buy or rent.
Spot and avoid housing fraud and scams
Be alert for housing scams, from fraudulent rental agreements to real estate fraud that could lead to someone losing their home. The online and printed guides tell you what to watch out for and what to do if you suspect fraud.
Other resources for home-owners
FCAC published several guides and resources useful for home-owners and renters, such as Making a budget and sticking to it, Before you Sign Any Contract: Ten Things you Need to Know, and Selling a Home.
For all FCAC’s information, publications, tools and resources, visit itpaystoknow.gc.ca.