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Renting your first apartment
From: Financial Consumer Agency of Canada
Costs of living on your own
Before you move out of your parents’ home, consider all the costs of living on your own. Wherever you live, your basic expenses will be more than just the cost of campus housing or rent. Knowing the costs of living on your own ahead of time will help you prepare a realistic budget that you can live with.
Upfront costs of moving
Before you move, you may have to pay for some things upfront, including first and last month’s rent and utilities.
Security deposits, first and last month’s rent
Your landlord may ask you to pay a security deposit before you rent an apartment. These deposits are typically used to cover potential damage to the rental unit. You'll usually get your deposit back if you leave the rental unit in the same condition as when you moved in.
Generally, the security deposit can’t be higher than the cost of one month’s rent. In Quebec, landlords must not ask for last month’s rent or any other money aside from the first month’s rent.
Your landlord may ask you to pay the first and last month’s rent at the same time. Some landlords may let you pay the last month’s rent when you complete the rental application and then pay the first month’s rent when you’re ready to move in.
Generally, landlords use last month’s rent to pay for the last month you live in your apartment. For example, in Ontario, landlords must not use last month’s rent to repair damages to the rental property.
For the rules on renting in your province, see the Canadian Mortgage and Housing Corporation’s Provincial and Territorial Fact Sheets.
Utilities and telecommunications
You may need to pay a fee to set up a new account with a utility, cable, Internet or telephone company. You may also need to pay security deposits on these accounts.
Security deposits vary depending on the company you’re dealing with.
- The amount you pay for a security deposit may be based on:
- Estimated usage
- Your credit history
- A flat rate determined by the utility company
- You can ask the company to waive the security deposit if you have a good credit history.
You can usually get your deposits back if you pay your bills on time and don't owe the company any money. The refund will usually appear as a credit on your bill when you close your account or when you show a good payment history. The company may have to to pay you interest on your security deposit. Check with your utility company.
You may need to add these upfront moving costs to your budget:
- truck rental
- moving boxes and other supplies
- time off work
For key questions to ask when choosing a moving company.
If you live in an apartment or rent a home, it’s a good idea to get tenant’s, or renter’s, insurance.
Consider getting enough insurance to cover the value of:
- damage to, or loss of, your possessions
- personal property stolen from your car
- accidental damage you cause to any part of the rental property
- injury caused to visitors
Learn about different types of home insurance policies and the coverage they offer.
Outfitting your place
If you're moving out for the first time, you may need to buy:
- kitchen utensils
- small appliances
- cleaning supplies
Ongoing costs of living on your own
Depending on what your rental agreement or lease covers, you may also need to pay for:
- utilities such as hydro and heat
- telecommunications including cellphone, Internet, cable, telephone
- snow removal
- lawn maintenance
Living with a roommate
To reduce your overall living expenses, you may want to consider sharing the cost of rent, utilities and other household expenses with one or more roommates.
If you decide to live with someone else, discuss your living arrangements and shared financial responsibilities.
For example, figure out the following:
- How you'll divide rent
- How you'll divide the security deposits
- Will you share bills and expenses or pay for them separately
- What each of you'll buy for the apartment
- Make sure you understand what you're responsible for.
Usually, when you sign a rental agreement or lease with a landlord, you’re legally responsible for:
- any damages to the property
- paying the rent on time
If two or more tenants sign the same rental agreement, each is equally responsible for payments and damages. If each of you sign separate rental agreements, you're only responsible for what is in your own written agreement.
If your name alone is on the utility bills, you must pay them on time. Missing a payment for your rent or utilities could hurt your credit score.
Tenant and landlord rights and responsibilities vary across the country.
Check the provincial and territorial laws that apply to you.
Check your credit report before you consider moving
Your credit report and credit score may affect your options when you decide to move out on your own. Some landlords may run a credit check on you to be sure you'll pay the rent on time.
If you don’t have a credit history yet, or have had credit trouble in the past, a landlord may ask you for a guarantor. A guarantor is usually a parent or guardian with a good credit history. The guarantor agrees to pay for you if you're unable to pay your rent.
Some landlords will ask you for your social insurance number to run a credit check. If you don’t feel comfortable sharing this, you don’t have to provide it. The landlord can still get your credit history using other forms of identification.
Take the time to understand your credit report and credit score, including how your credit report works and why your credit history matters.
Move out within your budget
Spending too much on rent may make it difficult to cover your other expenses or save for future plans.
In general, your rent payment and household-related expenses should not be higher than 30% of your gross household income. Your gross household income is all income you receive before taxes and deductions. For example, if your gross pay is $4,000 a month, try to limit your housing costs to $1,200 a month or less.
Review your budget
Before you move, prepare a realistic budget that reflects your needs and wants.
Need: something essential that you must have, such as shelter, basic clothing, food or renter’s insurance.
Want: something non-essential that you want but don't need, such as cable TV, designer clothing or eating out every week.
It’s also important to think about things like housing location and access to public transportation.
To help you prioritize and decide what to include in your monthly budget, list non-essential features in order of their importance to you.
For example, figure out what it would cost for a place that offers you:
- walking distance to school or work
- public transportation close by
- businesses and conveniences close by
- 24-hour security
- laundry facilities
- air conditioning
- family or friends close by
- gym or exercise room
- hardwood floors
- on-site storage
Set financial goals before you move
Whether you’re planning to move out next month or next year, think about your financial goals. Then make a plan to be sure you have enough money to meet them. Make room in your monthly budget to begin saving for these goals.
For example, think about:
- How much you need to save for first and last month's rent
- How much you need to save for deposits
- What furniture you may need to buy
- What other items you may need to buy
Make room in your monthly budget to begin saving for these goals.
Budget for your move
While you get ready to move, stay organized, stay on track and stay on budget.
Build an emergency fund
Make saving part of your monthly budget.
You'll have unplanned expenses. For example, your car breaks down or you lose your cell phone.
Start saving so that you don’t have to use a credit card or line of credit to pay for unplanned expenses. Begin by transferring 5% to 10% from each paycheque into a high-interest savings account, a TFSA or investment account. You should be able to access your money quickly, and at low cost, in case of an emergency.
Most employers will deposit your pay directly into your chequing or savings account. You may find it easier to reach your saving goals if you set up automatic transfers to a savings or investment account each pay cheque.
Plan for debt repayment
As part of your overall budget, you need to plan for debt repayment. This is especially important when you're considering your monthly housing costs. If you have debts to repay, some properties may be unaffordable. Or you might need to consider getting a roommate to share expenses.
Try out your monthly budget
Before you move, make sure that you have enough money to cover your monthly living expenses and the costs of moving.
If you don’t have enough money to cover your expenses, review your budget to see where you can cut back. Focus on reducing non-essential expenses such as spending on entertainment or eating out. Avoid cutting essentials such as rent or food. You may also want to consider delaying your move until you can save enough money to cover the upfront costs.
Once you have the right balance of income and expenses, try following this new budget for a few months. Make sure you can live the way you want to within the spending limits you've set for yourself. If you're struggling, go back to your budget and rework the numbers. Or find more money to cover the shortfall.
What to consider before you rent
Instead of renting, you may be considering buying a home. Deciding whether to rent or buy a home depends on your needs and financial circumstances.
If you choose to rent, you may not have to pay for:
- real estate agent fees
- property taxes
- home maintenance costs
- utilities such as water if they’re included in the rent
Learn more about what may be included in your rent, see the Canadian Mortgage and Housing Corporation’s Paying the Rent: What’s Included – and What’s Not.
Some other advantages to renting are that:
- there is no long-term commitment
- if something breaks, a superintendent or landlord will usually arrange to have it repaired or replaced, unless you were responsible for the problem
- renting may be cheaper than buying a house
If you're thinking that owning a home is for you, consider the costs of buying a home and maintaining a home.
What you should know about rental agreements
A rental agreement, or lease, is a contract between a landlord and a tenant. The landlord grants the tenant the right to occupy a rental unit. In return the tenant commits to paying rent. The contract may also include other terms or rules. When you sign a rental agreement, you're agreeing to respect those terms or rules.
A written rental agreement is an official record of what you and the landlord have agreed to. If there's a dispute later, the rental agreement may help to settle it.
If this is your first time renting, your landlord may ask for a guarantor. This is someone who agrees to pay the rent if you can’t. If you need a guarantor, the landlord will have them sign an agreement that describes their responsibilities.
What your rental agreement includes
- The landlord’s and tenant’s names, addresses and contact information
- The rental term, the length of time you agree to stay in the apartment before ending your rental agreement
- The monthly rent amount
- The date you must pay rent
- Services, such as electricity or parking
- Any separate charges
- The conditions for the termination of a rental agreement
- When the landlord can increase the rent and by how much
- The deposit amount and any conditions
- The rules that the landlord requires all tenants to follow
Inspect your apartment first
Before you move in, inspect the apartment. In some provinces, you're required to do an inspection. This will ensure you're not held responsible for damage that may already exist.
The inspection should be done with your landlord. Document and photograph any visible property damage.
Use the Canada Mortgage and Housing Corporation’s Initial Inspection Worksheet Primer and Initial Inspection Worksheet.
Subletting your apartment
If you need to move before your rental agreement expires, you may choose to sublet your apartment. To sublet your apartment, you'll need to find someone who will live in your place, pay rent and follow the requirements set out in your rental agreement.
If the person you're subletting to does not pay the rent or causes damage to your apartment, you're responsible.
Before you sublet, you need permission from your landlord.
Learn more about common rental requirements in the Canada Mortgage and Housing Corporation’s Guide to Renting a Home.
Questions to ask before you sign the rental agreement
- Which repairs are your responsibility
- How much notice you must give if you want to end your rental agreement–usually 60 days
- Subletting rules
- When and why your landlord can enter the rental unit
- How to resolve disputes in case of late payments, damages or eviction notices
Protect yourself from rental frauds and scams
Watch out for rental scams. In general, if a deal sounds too good to be true, it probably is.
Warning signs of rental scams include:
- the monthly rent is much less than the current market rate
- you're asked to leave a deposit without any formal rental agreement or lease in place
- you're asked to send a security deposit to a landlord outside the country
- you're offered a unit but no one does a background check on you
- when you ask about the apartment, you get an email that sends you to a website asking for personal or financial information
- ads that show pictures of the outside of the property only, or pictures that don't match the actual property
- Ordering your credit report
- Checking for errors in your credit report
- Savings accounts
- Tax-Free Savings Accounts
- Making a budget