There are many ways one can live in Canada. One can live in apartments, own a single-family house and even rent out a townhouse or two level house depending on how they want to live their life and which province they call home. However, there isn’t really an easy way to decide which option is better because each option has its benefits and its drawbacks. So, let’s talk about the pros and cons of renting versus owning in order to help you decide what will make you happiest as an owner or tenant!
Why do people rent?
Reason that most people rent versus own a home is because they think it will be cheaper. But sometimes renting can cost more than buying – especially when you factor in your down payment and future maintenance on a house! Of course, there are times when renting can also be more affordable than buying. One thing to keep in mind as you look at the numbers is whether you truly plan to stick around an area long enough that renting or buying will come out to be the better option. Affordability should certainly be one of your top priorities, but it’s not necessarily the deciding factor between the two options!
Another reason people may choose to rent instead of buy is that they simply aren’t sure where they want to live, or maybe they are either moving from out of town, in which case they may need temporary housing while searching for a more permanent place.
Pros and cons of renting
To help you decide if renting is right for you, we have put together a little list of pros versus cons to help you see if it is the right fit.
|Pros of Renting
|Cons of Renting
Lower upfront costs
Short-term commitment for people unsure of where they want to plant roots
Protection from potential decrease in property values
|Monthly payments may increase
Potential for being evicted / lease renewal not being approved
Paying to someone else’s mortgage instead of building your own equity
Requiring permission to paint or remodel
Why do people buy?
When buying a house, it is commonly believed that one of the great benefits involves security. Usually renters aren’t able to raise their concerns regarding the property’s other residents. For example, a landlord may decide to move in his or her parents but you are there on your own schedule so you might have to leave if this person decides its time to have a permanent place of residence. Landlords also have the power to drive up prices during lease renewal periods. However, when you own your own home, you’ll have a greater degree of control over any potential changes relating to real estate moving forward while still having a sense of stability and peace of mind knowing there’s nobody else around looking for the same thing as yourself. You can live well knowing that whatever happens with rent and property values can’t affect your lifestyle whereas that is not always the case for apartment dwellers who might experience dramatic price spikes without notice.
pros and cons of buying:
To further show the benefits and costs to buying, we have broken down some pros and cons to help you to determine if this is the right path for you.
|Pros of Buying
|Cons of Buying
|Freedom to renovate or modify your home as you wish
You are building up equity in a safe, secure investment as you pay down your mortgage
Potential for additional income if you have a rental suite
Stability and peace of mind from being in control of your investment and owning the place where you live
|The risk of losing your home value when you sell
Responsibility for all ongoing costs, including mortgage principal and interest, property taxes, insurance and maintenance
Monthly payments can increase if interest rates go up at renewal time
Possibility of unexpected and potentially costly repairs
When it comes to renting vs. buying, the right decision to buy or rent real estate is all about you!
Did you know? 4 in 10 households spend more than 30 per cent of their pre-tax income on rent, which is above the commonly accepted affordability threshold.
Even if the monthly expense of rent is $900 and the owner of a building tells you that a home can be purchased for approximately $1200 a month, taking on this mortgage may not necessarily benefit you. Sure, your expenses are lower at the moment – but either way your living situation won’t grow any equity by month’s end! If you’re tired of searching homeless shelters or apartment listings all day because it seems every place wants too much in rent, staying at someone else’s house in return for work (i.e. room and board) might be exactly what you need while trying to save up enough money to purchase your own property with the help of agents who have real estate experience or even mortgage brokers who may have expertise in the field.
Yes, you can find the perfect place for you!
If you are unhappy renting or really prefer the idea of owning your own home, you CAN. It is time to stop assuming you cannot make the leap from renting to buying – all you need is the right information and the right preparation!
To determine if you are able to purchase a home, it’s helpful to start with Concept One Financialthat can create a picture of what you can afford. We help you to allocate your budget wisely towards your monthly mortgage costs. Showing you what is affordable for your income bracket helps you take the next step by putting together a plan with an honest image of what it looks like when these expenses come into play.
Some other things to consider before buying include:
- Your credit score – do you have good financial standing to be approved for a mortgage?
- Your savings – do you have any money put away for a down payment? If not, do you have wiggle room in your budget to start saving?
- Your time – do you have the resources to maintain a home from the yard to any necessary repairs?
Regardless of whether you choose to continue renting or make the leap to purchasing a home, your financial security is the most important factor. What works for your friend or parents may not work for you — and that’s okay! However, educating yourself and researching all the different options will ensure that, at the end of the day, you are in the best situation for yourself.