When considering where next to put down roots and start your next chapter in life, having the right kind of home for your finances and needs is crucial. Of course, renting comes with its own range of conveniences, as does homeownership, but there are also side effects of each that should be weighed before coming to a final decision.
Today, let’s help you do exactly that. Is it better to rent or buy? The answer depends on what you need, what you can afford, and what your idea is of a dream home, among other factors.
This is the elephant in the room, depending on which property you’re looking at. There are a variety of factors at play here, regardless of whether you rent or own, that will affect the total expense out of pocket in various ways. These include the following:
- Where you’re located (some neighbourhoods may have higher prices due to demand, like Westboro)
- Utility costs and fee increases
- Lease expiry or renewal (if renting), at which point the landlord might raise rents
- Interest rate fluctuations during mortgage renewal periods (if owning)
- Any renovations you want or need to make as a homeowner
- Cost of living (groceries, commuting via car or transit, childcare, and otherwise)
- Annual taxes
- Home inspections, down payment, realty expenses, and otherwise (if buying a home)
As indicated by these example figures above, renting is indeed more affordable in the long run as you’re responsible for far less if not the owner. Of course, this means that you are much more limited in terms of what you’re allowed to do with the property you rent, and any major dream renovations are likely not going to happen unless the landlord is fine with them.
While homeowning affords you plenty of freedoms, there are many more costs to consider. These aren’t typically anything dramatic and well worth the investment if you wish to stay in your home for decades or generations rather than years, but the sheer number of them can be daunting to smaller budgets. You should weigh the pros and cons carefully of whether renting or homeowning is a suitable avenue for your budget and lifestyle.
Stability and Flexibility
Compared to renting, owning your property for as long as you see fit brings an added sense of security and stability. You don’t have to worry about leases expiring and, once that happens, the rent potentially going up. No unorthodox timelines or other restrictions are imposed upon you, either, which can usually mean a less stressful experience in this regard.
Renting affords financial stability, in a way. This is largely due to the fact that you’ll generally have far fewer fees and bills to take care of. If you’re lucky enough to find a rental property with monthly fees that are within the realm of reason, perhaps even with included utilities, then you can hang onto more savings in the long run and usually pay less. Again, however, you should first consider the potential downsides of renting if any cause interference with your plans, especially if you want something you can invest in rather than simply paying to use it as a home. You won’t get that money back with the latter!
The Home Ownership Advantage
While renting is less expensive overall compared to homeownership, to some, it might feel like there’s nothing to show for it (as suggested above). This is because, by design, there is no return to you as the renter on what you paid into the property. More folks than ever are buying rather than renting because of the projected value of owning their home outright. After ten years of mortgage payments, as demonstrated by the figures below collected from a study of 278 real-world examples, you’ll be able to decide whether it makes sense to retain the investment or sell.
Don’t forget, having the ability to sell in the first place can give you a chance to hit refresh, especially if your home has appreciated in value beyond what you paid! This can not only pay off outstanding debts but possibly give you some float for use in future investments. For assistance with finding properties for sale in the National Capital Region that align with your current and projected finances, we’re happy to assist here at McElheran & Associates. Reach out to us today to get started!