Canadian MP says rent payment history should be mortgage qualifier
A Conservative MP is questioning why rent payment history isn’t being considered when qualifying for a mortgage.
Michelle Rempel Garner, MP for Calgary Nose Hill, shared a blog post on Monday highlighting a report released by the City of Calgary, which shows that Calgarians need to make $84,000 a year to afford average rent prices in the city. That number has jumped an additional $17,000 since last year when the average income to afford rent was $64,000 in Calgary.
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Garner shared a story told by Jaxkson, a 23-year-old education graduate and aspiring homeowner in Calgary. A story that is all too familiar to many young Calgarians.
“Jaxson made an intelligent observation. With rental costs as high as they are, many peers in his age group will pay monthly rent that could approach the amount of money they would spend on a mortgage payment. If they had a history of making their rent payments on time, why couldn’t that be used as proof that they could pay a mortgage for about the same amount?”
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The answer to this question is somewhat complex, according to Garner.
“Currently, in Canada, rental history isn’t directly considered by a mortgage lender unless it is for something serious and negative like an eviction. Due to the nature of the payment, rent isn’t necessarily included in an applicant’s credit score. That’s not to say that rent payments can’t be reported to credit agencies. They can be, but only if the tenant and landlord are both willing to do so…”
The problem is the current system doesn’t necessarily reward people with a good history of rent payment.
The issue is set to be debated at the Conservative Party convention this week.
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