Whether to buy or rent a home is a question many of us contemplate at some point. And the truth is, the answer isn’t crystal clear. The pros and cons of each option are largely dependent on current market conditions, government regulations and, of course, your financial situation.
However, when weighing the decision of renting or buying, it’s worth thinking about some factors that are often overlooked.
It’s all about location
Compare the cost of rent to mortgage payments in the neighbourhood you want to live in. Last year, The National Bank of Canada reported that on average, rent payments are lower than mortgage payments. But it’s a big country, and rent costs vary widely. Some locations, like resort towns or seasonal tourist hotspots, can have very high rental rates, even though they’re located outside of “hot” real-estate markets like Vancouver or Toronto. Do your homework and find out specific rates in your area before nailing down a decision.
Know your five-year plan
Owning a home is a commitment. You can’t simply sell your house overnight or break a mortgage without paying a heavy penalty. If you’re planning to stick around the same place for at least five years, buying a home can be a good option. But if you know a move is on the horizon, renting offers more flexibility and ease.
Don’t forget about hidden costs
Property taxes and home insurance fees add significant costs to your monthly budget, so you’ll want to account for them in your decision-making. Be sure to research tax rates for the neighbourhoods you’re interested in. Remember that purchasing a home can trigger a tax reassessment. Make sure you’re prepared to pay tax on the final sale price of your house.
Home insurance is something you won’t want to forgo as an owner, and it tends to be more expensive than renter’s insurance. And, homeowners have to foot the bill for regular maintenance and repairs.
Learn about the third option
Land lease home ownership is a lesser-known choice, but one that’s growing in popularity. This home ownership model allows you to purchase a home while leasing the land it’s sitting on. With this option, you get the benefits of owning a home – like building equity – while reducing the overall cost of your mortgage. Living in a land lease community, such as those managed by Parkbridge, means you have access to communal amenities and social activities within your community that you typically wouldn’t find elsewhere.