What is best for you? Rent vs Buy … or?
Should you rent or should you buy a home? It’s a good question, but with no clear answer.
Upside to Buying
- Offers long-term benefits of security, equity and potential growth in personal wealth. Also, a home’s equity value may appreciate over time – when it comes time to sell, you may earn a profit.
- A house is your legal property, which allows you greater freedom than a rental property. You can alter the property, including decor changes, landscaping and renovations, to suit your needs and your style.
- You have the option of becoming the Landlord by renting a portion of the house or the entire home. This allows you to generate income and help pay the mortgage.
Downside to Buying
- It’s a big financial responsibility.
- There are additional costs to homeownership – taxes, insurance, and maintenance.
- You run the risk of not making any profit through resale.
- You are less mobile than a tenant.
Upside to Renting
- Flexibility. Renting requires no long- term commitment from a Tenant, and is the best option if you don’t intend on staying in one place for a long time.
- As a Tenant, there is the possibility of living in an area in which you could not afford to buy.
- The only insurance you need is to cover your contents.
Downside to Renting
- You are bound by the rules of the lease agreement, which can impact the freedom to use or renovate the property.
- Renting offers no wealth creation or return on investment. You are helping to pay the Landlord’s mortgage.
- You have no control over annual rent increases.
- There is no guarantee that a lease will be renewed when it expires.
Or … Both, Rent to Own
A Rent-to-Own is a lease (regular rental agreement) plus an option agreement & deposit, which gives you the right (without obligation) to purchase the property within a specified period, usually 3 years or less, at a price or price formula agreed-upon today. The tenant/buyer pays fair market rent plus an additional rent premium, accumulating as down payment to be credited against the purchase price.
If you’re thinking about buying a home in the new future, please reach out to your bank or favourite mortgage broker to discuss your options.
Candace Perko, Mortgage Broker
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