Over half of Canadian renters doubt they'll ever be able to own a home in Canada
For many Canadian renters, the prospect of owning a home in Canada is nothing but a dream.
That’s according to new survey results published by Canadian-based fintech company Borrowell.
The company sent its survey to 1,500 members who rent to learn more about how long they had been renting and if they would be in a better position today if they could build credit earlier.
The traditional way to boost your credit score is to own a credit card and build a credit history by making timely payments.
However, renters who have been making consistent long-term rental payments often have nothing to show for it on their credit profile, noted Borrowell in a release.
The majority of renters who took the survey said they had been renting for over 11 years, paying between $1,000 to $2,000 per month.
Borrowell highlighted that those renters would have spent between $132,000 and $264,000 on rent payments without building credit.
“This amount sums up to more than 18% down payment on an average $704,000 Canadian home,” stated Borrowell.
Half of renters said their credit score wasn’t enough to get the mortgage they wanted and over half (51%) said they doubt they’ll ever be able to own a home in Canada.
The majority (65%) of renters said they would be in a better financial situation today if they had started building their credit earlier.
A whopping 90% of respondents agreed that it’s harder for renters to purchase their first home today compared to their parents
Not only does your credit score impact whether you qualify for a mortgage, it also affects the type of mortgage you can secure.
It could also affect the size of a down payment a lender will need, which determines whether you have to pay for private mortgage insurance (PMI) and, if so, how much.
According to Loans Canada, the minimum credit score needed to qualify for a mortgage in 2024 is 620 to 680, depending on the lender.
To address the issue of credit scores among renters, the federal government introduced the Renters’ Bill of Rights as part of its 2024 Budget.
The Bill of Rights aims to help young people get a foothold in the housing market and one of its primary action items is to make credit bureaus take rent payments into account when calculating someone’s credit score to help more Canadians qualify for a mortgage.
For Canadian renters looking to boost their credit score, Borrowell has a rent reporting tool called Rent Advantage. This tool allows tenants to share up to 24 months of past rent payments with Equifax so they don’t have to rely on their landlord.
With files from Isabelle Docto
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