Rent Increase, Freeing Home Equity
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Dear David,
I just received notice that my rent is going up in October. Aren’t I allowed more notice than this? – Worried

DEAR WORRIED: Without knowing when you received notice of the increase (and assuming you are a standard residential tenant), your landlord may lawfully increase your rent payment once in a 12-month period and is obliged to provide 90 days written notice before doing so. A rent increase is void without proper notice stating when the increase will take effect. If your landlord did not give enough notice, you can refuse to pay the rent increase until proper notice is provided.

Often times, tenants can face a rent increase when their lease comes up for renewal. To give you an idea of what is permitted, Ontario’s guidelines allow residential landlords to institute a 1.5 percent rent increase in 2017 and a 1.8 percent increase in 2018, given that proper timing and communication rules are followed.

Dear David,
I am retired and would like to free up some of the equity I have wrapped up in my house. What are my options? – Off the Clock

DEAR OTC: If you own your home, have no major debts, and if downsizing isn’t right for you, there are a number of financing options that may allow you to access the equity in your home. As a Seniors Real Estate Specialist (SRES), I would recommend either refinancing or a home equity line of credit, depending on how much you need and when you need it. Before moving ahead with either, discuss the implications with your financial advisor. You must qualify for financing in each case and will want to understand how these choices affect your big financial picture. If you don’t have a financial advisor, drop me a line and I’ll be happy to refer someone I trust.

But back to your question: if you have the resources to cover a monthly mortgage payment, refinancing is usually the simplest way to free up funds. With refinancing, you can borrow up to 80 percent of your home’s value at a reasonable interest rate and repay the loan in monthly installments over 25 to 30 years.

Alternately, a home equity line of credit gives you the flexibility to borrow as much or as little money as you need (up to 65 percent of your home’s value). You’ll need to be diligent about repayment in this case, as your minimum monthly payment is simply the interest on what you’ve borrowed (and like a credit card, debt can add up fast). The interest rate on a line of credit is variable and can sometimes be combined with your regular mortgage, to a maximum of 80 percent of your home’s appraised value.

Another (and perhaps the most expensive) option is a reverse mortgage. It offers less stringent qualification criteria and lets you borrow up to 55 percent of your home’s value, either all at once or in fixed monthly amounts. In most cases, the entire loan with interest is repaid when you sell your home or pass away. This option will affect the value of your estate, so be sure to speak with your lawyer about the consequences for your benefactors before moving ahead.