Because the desire to own your own house is nearly fundamental, many potential home buyers are motivated by a yearning that may border on insanity. It is easy to disregard the obvious signals that you will be “home-poor,” and you may even jeopardize your entire financial future in order to buy a property that you obviously cannot afford. However, with thorough and methodical preparation, you can discover exactly what price range of the residential property you can afford, allowing you to make an educated choice on whether it is better for you to continue renting or take the plunge and purchase your own house.
The Unparalleled Benefits of Home Ownership
Buying a house provides an unrivalled opportunity to accumulate equity. Although a large portion of the monthly mortgage payment is allocated to interest, particularly at the start of the term, some principle is still deducted from the loan each month. Furthermore, the historical pattern of residential property has always been one of year-on-year appreciation, with just a few brief and transient dips during the last century. As a result, you are not only lowering your monthly loan payment, but you are also benefiting from the overall growth in the value of your home.
No matter how long a tenant lives in their home, at the conclusion of the lease, they will always have nothing of lasting worth to show for the years of monthly payments. In and of itself, this is the primary reason that appears to make buying a home rather than renting a foregone conclusion. However, the overall factors are not that straightforward.
The Most Important Factors to Consider:
- Your desire to increase your credit rating in order to borrow in the future.
- The level of personal and financial stress you’re willing to put up with.
- The difficulties and costs of migrating.
- Your tendency towards spending vs conserving.
- The strategy you have in place for your RRSPs and pension…as well as a variety of other things
Some Tenants May Find It is preferable to continue renting.
When renting a home, you have the option of ending the lease on a certain date. However, if you own a property and have been transferred to another city, for example, you may discover that it is simply not possible to sell your home on a specified date without lowering the price to a net loss level.
The most significant consideration in deciding whether to rent or purchase is usually money. Aside from the mortgage payment, there are several expenses associated with the continuous ownership of a residential property. There are taxes, levies, municipal utilities, insurance, and even strata fees and land lease payments in some circumstances. The most significant of these, though, might be maintenance and repairs. Some properties might cost tens of thousands of dollars each year to maintain in proper aesthetic and operational condition. This fee is always carried by the landlord, and the renter is usually indifferent about it.
When you own your own house and the roof leaks, the plumbing clogs, or the electrical system fails, you may face repair expenditures in the thousands of dollars. There is no way to call the landlord and urge them to correct it. You’re completely on your own.
As a result, the decision to rent or buy is always dependent on the specific property. If you are looking for a lovely century property, you may be faced with truly exorbitant upkeep and repair costs. However, if you are purchasing a relatively new home constructed by a reputable contractor, you may be looking at a period of years when all you really need to do is keep the property in excellent shape and avoid any major unplanned repair expenditures.
The Canadian Market Is Now Generally Favouring Buyers
The current status of the residential real estate market clearly favours buyers. Interest rates are near to historical lows, prices in many areas are far lower than they were only a few years ago, and the affordability ratio in the great majority of the country is presently higher than it has been in recent memory. There are certain locations of the nation, most notably South-western Ontario, Quebec, and portions of the Maritimes, where a quality little home may be acquired for less than the price of a new family vehicle.
These reasons can be a strong motivation for renters to take the plunge and realize their long-held ambition of house ownership. It is critical, however, to make the decision to purchase or rent based only on financial facts, rather than nostalgia, pride, or emotion.
