Tips to Make Housing Costs More Affordable

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Q: Conversations around the proverbial water cooler at work frequently revolve around how to better manage our high housing costs My colleagues and I are all in the early stages of our careers, having recently completed our undergraduate degrees. Our group is diverse, with some of us being single and others having partners, and we’re all within a few years of either side of 30. I was fortunate enough to receive an inheritance from my grandmother, which allowed me to buy a small studio apartment. Another colleague also owns their condo, but the majority of younger people in the office are renting. We can’t ask for raises of 20 or 30 per cent, so what can we do to manage our housing costs better? ~Landon

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A: Navigating the reality of steep housing costs can feel discouraging when it seems that each month a significant portion of income goes toward rent or mortgage payments and the expenses that keep a home running. This challenge is more than just numbers on a spreadsheet; it is a persistent concern, shaping the daily choices and long-term goals of Canadians of every age. Regardless of whether you are at the beginning of your career, have recently become financially independent, or are sharing expenses with a partner, managing financial responsibilities during these economically uncertain times is a theme frequently discussed among friends, family, and colleagues.

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As employment landscapes shift and the cost of living remains high, many young adults face difficulties with balancing their long-term goals and present circumstances, including heightened concerns about achieving financial stability. In light of these factors, the following are practical tips for renters, homeowners, and anyone seeking strategies to make their housing expenses more affordable.

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Tips for renters

While rental markets in desirable areas have shown small signs of stabilization, affordable housing options continue to be limited, leading renters to explore creative options to reduce costs. You may want to start by approaching your landlord about a rent reduction when your lease is up. Highlight your reliability as a tenant and possibly offer modest concessions, such as paying for a maintenance item that your landlord would normally cover. Alternatively, shop around for comparable units in more affordable neighbourhoods or buildings, perhaps in nearby suburbs or smaller towns where rents are often lower.

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Sharing accommodations is another great way to cut costs. Looking for a roommate or moving into a shared house can significantly reduce your rent, especially in high-cost cities. If you have extra space, like a basement or spare bedroom, check your lease to see if subletting is allowed to offset your expenses.

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Another avenue for renters might be researching eligibility for government support and local resources. Programs such as the Canada Housing Benefit, which is a joint federal-provincial-territorial program that provides financial assistance to lower-income renters, may provide the housing support you need. There might be provincial benefits, like the B.C. Renter’s Tax Credit, to help offset rental payments when you file your income taxes. Finding eligible resources may require effort and persistence, and since benefits can change annually, review options regularly if you don’t find suitable ones immediately.

Some renters might be able to apply for rent-geared-to-income housing through municipalities or non-profit providers. While waiting lists for subsidized housing can be long, it’s free to apply, and approval could significantly lower your rent.

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Additionally, consider if negotiating with your landlord to share utilities in exchange for taking on small tasks such as snow removal or landscaping is possible. These small adjustments can add up, helping you manage housing costs more effectively without sacrificing stability.

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Tips for homeowners with a mortgage

High housing costs can be challenging for homeowners with a mortgage. Consult your lender to explore options for renegotiating your mortgage. Both your lender and mortgage brokers can explain refinancing solutions and how extending your amortization for example, from 20 to 25 years, can lower your monthly payments, giving your budget much-needed breathing room. However, extending the amortization period results in higher total interest payments over time, requiring careful consideration of the trade-off between immediate payment relief and increased long-term costs. Mortgage professionals can also provide information about hardship programs such as payment deferrals or other relief options.

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Another way to boost your finances is to rent out unused space in your home, like a basement suite, spare room, or garage. This extra income can go straight toward your mortgage, making the payments feel a little less daunting.

If your non-mortgage debt payments are high, consolidating those debts with a low-interest rate home equity line of credit (HELOC) may improve your monthly cash flow and make it easier to afford your mortgage and/or strata payments. However, to avoid overextending yourself, only use a HELOC for debt consolidation when it is dedicated solely to that purpose and accompanied by a well-defined repayment plan. In other circumstances, alternative debt relief strategies may be more suitable.

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General strategies for reducing housing costs

Whether you rent or own your home, there are additional strategies available to help manage housing expenses and reduce their impact on your budget. Start by creating a detailed budget to track your income and expenses. You may want to use an app or budgeting spreadsheet to simplify the process and test different scenarios.

Aim to keep your housing costs at about 35 or 40 per cent of your income, and don’t forget to include extras like parking, condo fees, or tenant’s insurance to get a true picture of your housing-related expenses. Adjust the guideline based on your circumstances, for instance, if you have chosen to live closer to work in a more costly area — but doing so avoids a car payment — this may increase the percentage of your income spent on housing.

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Budgeting Guidelines by Percentage for Cost-of-Living Categories

To stay prepared, set up automatic transfers to build an emergency fund for unexpected expenses, and consider saving a little extra for goals like a bigger down payment or a buffer against rent increases or moving costs.

Every three months, set aside an hour to review and compare your current housing costs with other available options. This can include examining rent prices, mortgage rates, or utility service providers to determine if making changes is in your best interests.

Once you’ve adjusted your budget as much as possible, focus on increasing your income. You may be able to pick up a side gig, do freelance work, or sell items gathering dust around your home. Using a cash back credit card for specific, planned expenses and applying the rewards to your budget can increase available funds, provided the card is used in a disciplined manner.

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If you work from home and are self-employed, contact a tax professional to explore deducting a portion of your rent or mortgage as a business expense. You may be able to trim your net housing costs when you file your income taxes.

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Finally, consider some lifestyle adjustments to keep costs in check. If your current home feels too expensive, think about downsizing to a smaller home or relocating to a more affordable area.

Gather a group of four or five neighbours to create a shared tool kit, allowing the cost of tools and appliances — such as pressure washers, lawn mowers, or bread makers that are not used daily — to be divided among participants.

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Form another group of friends or family to bulk-buy groceries and household goods. If you live alone, share large packages to avoid wasting what you don’t need or creating storage problems.

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Team up with neighbours to trade services like pet care or someone who can do minor repairs. This can help you avoid paying out of pocket for every little repair, making your housing dollars stretch further.

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The bottom line on making housing costs more affordable

Whether you rent or own, tackling high housing costs is entirely possible with the right approach. Blend practical strategies such as negotiating better terms, exploring government programs, or making lifestyle adjustments, to ease the financial strain and keep more money in your bank account. Look for additional ideas online and adjust creative tips to best suit your situation. And remember, take it one step at a time; give yourself time to adjust and find the path to a more affordable and stress-free housing situation that works for you.

Related reading:

7 Tips to Fight the High Cost of Living

Budgeting for Retirement When Living Costs Are High

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Peta Wales is President and CEO of the Credit Counselling Society, a non-profit organization. For more information about managing your money or debt, contact Peta by email, check nomoredebts.org or call 1-888-527-8999.

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