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3 Jan

Buying vs Renting

General

Posted by: Tracey Brock

BUYING vs RENTING

At some point in their lives, most Canadians have probably asked themselves whether it is better to buy or rent a home. Purchasing a home is one of the biggest decisions most people ever make and it is definitely worth consideration before you make that large of purchase.  I mean, I have trouble deciding to buy a new pair of shoes without the careful consideration of whether my old ones are really ready for the round bin. 

Ultimately, the decision is a personal choice.  However, it does help to look at the ups and downs of buying to determine whether home ownership is right for you.

Some advantages of buying a home

Owning a home is generally considered to be a sound, long-term investment that can provide satisfaction and security for you and your family.  Each month when you make your mortgage payment, you are building equity in your home.  Equity is the portion of the property that you actually build through your monthly payment versus the portion that you still owe the lender.  In later years, this equity can be used to reinvest into other properties or investments, even pay for your child’s higher education.

There is also a tax advantage. If your home is your principal residence, any profit you make when you sell it is tax-free. A home can appreciate – or increase in value – as time passes, building more equity. As you build up equity, it’s usually easier to upgrade to a new home in the future thanks to the profit you’ll make when selling your current home.

My personal favourite is pride of ownership.  It just feels good to own your own home.  Decorate and renovate the way you like. Investing in yourself oppose to investing in your landlord is a great idea!

Some disadvantages of buying a home

It’s easy to get caught up in the excitement of buying a home, therefore it’s important to remember that home ownership has some additional responsibilities as well.  For one thing, a home can be expensive. Chances are, your monthly payments will be more than what you are currently paying in rent when you factor in such things as your mortgage, property taxes, repairs and general maintenance.  Owning a home ties up some of your cash flow and is likely to reduce your flexibility to move to a new location or change jobs.

While your home might increase in value as time goes by, don’t expect to get a big return quickly. There are no guarantees that your home will increase in value, particularly during the first few years. In the beginning, you could actually lose money if you sell, because your home may not have appreciated enough to cover the real estate fees, moving, renovation and other selling costs.

Bottom line, Real Estate is usually considered a good sound investment over the long term.  That means when you are ready to begin and you have made the decision to buy, it’s important to carefully choose a home you can afford and always speak to a professional Mortgage Broker.  They can offer you invaluable advice and 99% of the time, their time and advice is free.

Know your options.  It is not out of reach. Millions of people enjoy the rewards of home ownership every day! You can too!

 

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