Deciding whether to rent or buy a home is one of the biggest financial choices you’ll make and it’s not always straightforward. Both options have pros and cons, and the “right” choice depends on your personal situation, goals, and readiness.
Renting:
Renting can be more flexible and low maintenance. Renters typically are not required to pay for maintenance and repairs, along with property taxes and other financial obligations that a homeowner faces. Renting can be great if you are just starting out on your own, or you have not settled in one city yet. Renting can also be great for retirees who want flexibility without the ties to homeownership. However, when paying rent, the renter is helping to build the homeowners equity. Equity can be used for many things, such as building your net worth, purchasing another property, consolidating debt, making investments ect. While renting has its benefits, long term, it typically makes sense to own.
Owning
Owning a home is a long-term investment. Paying monthly mortgage payments quietly builds equity over time, while your home will historically appreciate. Owning gives piece of mind and freedom to make a space your own. However, owning a home comes with repair and maintenance fees, property taxes, strata or management fees.
When people talk about making rent payments, which means they “obviously” can pay the same amount in mortgage, they are forgetting about taking existing labilities into account, or stress-testing the mortgage rate when determining qualifications. It’s important to think about all the extra costs that are associated with owning a home and buying a home. This is where we can help explain the difference and go over qualification amounts in one of our initial consultations. Reach out now to get started.
