When you’re looking for a home through real estate listings, Canada offers 2 basic options. You can either buy or rent. But which is the better option?
The truth is that the right or wrong answer will not be the same for everyone. It depends on your particular needs and situation, and only you can decide which option is better.
To help you understand, here are the core benefits and drawbacks of each option
Buying a Home PROs
- The value of the home can increase over time so you may generate more profit when you sell compared to your interest earnings when you leave your money in a savings account.
- As the home is your legal property, you’re able to use it as you see fit without a landlord limiting you. You can change the home style and renovate to suit your preferences and needs.
- You can earn income immediately from the home by renting it out. You can then use the rental income towards paying off your mortgage.
- If you use the property to generate income, you may enjoy some tax deductions.
- When you make montage payments on time, you improve your credit score.
- You can use the property as collateral when you borrow money.
Buying a Home CONs
- You may not pay rent, but you need to pay the mortgage, the property taxes, the home insurance premiums, and the costs of maintenance. Add these expenses together and they can exceed rent by a huge margin. So you better earn enough money to cover them all.
- It’s very possible that you don’t make profit on the home, especially when you resell very quickly. Real estate is an investment, and there’s no such thing as a sure investment especially for short-term profit.
- You’re not able to move to another address as easily. You will have to sell your home first.
Renting a Home PROs
- You’re a lot more mobile when it comes to your home location. It’s a lot easier to move to another apartment. So if you get a new job on the other side of town, you can just get a new apartment in that general area.
- You’re also able to live in a place where the home prices are simply too much for you. This means you can enjoy the various restaurants, clubs, and services that the more affluent can enjoy.
- Moving out is much easier for you, compared to how a homeowner needs to find a buyer for the home. You don’t have to find a replacement, as that’s the job of the landlord or property owner. If you signed a lease, you can always find someone to take over or you can even rent out the property.
- Rent doesn’t cost as much as the expenses involved in home ownership. So you’re able to use your money as you see fit, as your budget is freer. You can put that money in stocks, or even invest it in real estate. Or you can be a renter for all time and you can enjoy life with your spending money.
Renting a Home CONs
- Your lease or rental agreement limits how you can use or renovate your home. You will need to get the approval of the homeowner if you make any changes.
- There is no wealth creation. Your rent is lost forever, as you can’t get it back. You don’t put that money in home equity.
- The amount of rent you pay may increase every year, and you have no choice but to pay if you want to stay.
- If you have a lease, you’re not sure of it will be renewed. So you have to be ready to move out if it isn’t.
So which set of pro’s and con’s appeals to your preferences and budget? As always, the choice of whether to buy or to rent is entirely up to you.