To Rent or to Buy: A Closer Look

Is renting or buying a house a better choice? Given the present rental market, it’s a reasonable question. The solution, however, is more complex than you might imagine. 

When you consider the cost of condo ownership, renting a condo may appear to be the better alternative. Buying a condo, though, has several advantages. Although renting a home may appear to be less expensive, there are compelling reasons to buy. 

Although economic conditions can inevitably impact your predictions, the fundamental aspects to weigh while making a choice remain constant. Here’s what you should know before coming to a decision. 

Benefits of Renting 

Reasons why remaining a tenant is a smart choice: 

• You do not have money to put down a down payment on a house and cover the closing charges. 
• You have a job that demands you to travel frequently.  
• You want to live in a big city, but you can’t afford the expensive housing costs, or at least the ones in the nicer areas. 

Renting allows you to live comfortably without committing to anything long-term. Also, because rent hikes are limited by the Régie du logement, you should expect rentals to stay reasonably fixed. 

Obviously, investing in a home or condo does not imply that you are committed to a long-term lease. Despite this, the process is a lot more complex and prone to additional limits and expenses. 

Benefits of Buying 

The bad side of renting is that you need to pay a significant amount of money each month. All of this money ends up in the hands of the owner. 

When you buy a home, a portion of your monthly housing payment goes into your own hands. Of course, you must return your mortgage to the creditor, including interest. Nevertheless, a portion of each monthly payment is spent to return the capital, allowing you save some money through your property. 

Another benefit is that purchasing a home is a real estate investment. Your house, condo, or rental property will appreciate in value over time. You profit from the capital gains earned by your investment, in addition to the cash you have already repaid, when you are ready to sell it. 

Lastly, owning your own home is the most effective approach to truly feel at ease. You may decorate your house anyway you like and modify it as your preferences or needs change. 

What to anticipate before buying

Buying a home is typically favorable, provided you have the necessary funds. 

If the selling price is less than $500,000, a 5% initial down payment is required. If the property is worth more than $500,000, the down payment is 5% for the first $500,000 and 10% for the remaining amount up to $1 million, the maximum amount insured by the Canada Mortgage and Housing Corporation (CMHC). You will not be required to pay for CMHC insurance if your down payment is 20% or greater. 

Apart from the down payment, you must also pay for the following expenses when purchasing a home: 

Inspection expenses, notary fees, relocation charges, and other expenditures are included in the property transfer tax (welcome tax). 

Not to mention the fact that you’ll need to equip your new house and pay for regular bills like heating and repairs. 

Conclusion 

If you do your calculations, your mortgage payments each month could likely be just little more than what you are now paying for rent. Unfortunately, becoming a homeowner comes with several additional costs, such as property maintenance, condo fees, municipal and school taxes, and so on. 

Buying a house or a condo is great if you have the money and savings. Take the time to assess your objectives before beginning the home-buying process. A realtor can assist you in determining what is essential to you now and in the future. Working with a real estate broker may also assist you in making informed judgments!