Should You Buy or Rent a Home?
Renting vs Buying is a question many Canadians ask themselves every year and with it finally being 2021, now may be time to evaluate your current living situation and determine what’s the best option for you and your burgeoning lifestyle! Keep reading for a comprehensive list of pros and cons for both options to help you make the best decision on the rent or buy debate a little easier!
Pros of Renting
More Flexibility: One of the best perks of renting is having no long-term obligation to the property, save for the timeline outlined in your initial lease. A lease agreement lasts a period of roughly 6-12 months and once the lease ends, you can move out if you choose to. This flexibility makes renting a great option for those individuals who aren’t ready to be tied down and don’t intend to live in the home for a long period of time.
Less Maintenance: Owning a home means you’ll be allocating a great deal of your annual budget to the upkeep and maintenance of your home, whereas with renting, you can rely on your landlord or property manager to handle major maintenance in and around the property. This will save a great deal of time and hassle, which to some individuals is a major perk of renting!
Cheaper: An obvious benefit to renting vs. buying is the cheaper monthly payments that come with rent as opposed to traditional mortgage payments. You’ll have to evaluate your household income and determine what makes the most sense for you financially. Renting is on average more affordable than a mortgage and if you’re looking to have more income for savings and investments, renting might be the best option for you.
Cons to Renting:
Rental Increases: A pitfall to renting is you’re subject to rental increases by your landlord. The landlord is within their right to evaluate your rental agreement once every 12 months and decide to increase your payments as they deem appropriate. This may be a frustrating reality for some tenants whose rents is progressively being increased over time.
Can’t make the Property Your Own: Seeing that you don’t actually own the property, means that if you plan on doing any aesthetic changes to the property (like painting the walls or making changes to the interior or layout), chances are you will need your landlord’s approval. This is can be frustrating to renters who may feel like the property they’re staying in, will never fully feel like their home.
No Equity: While you may save money on maintenance and by paying rent as opposed to paying a mortgage, renters unfortunately also cannot build equity on the property they are leasing. That perk goes to the property owner who collects on your monthly payments.
Pros to Buying:
You Can Build Equity: The most obvious pro to buying is you own the home and therefore can build equity on the property overt time. Owning a home is a long-term investment that will often pay off in the long run, especially if you live in a burgeoning market.
Make It Your Own: Unlike with renting, the home is yours and the only person you must consult when making changes to the home is your own creative mind! With buying a home, you have the freedom to make the home your own, make renovations at will and never need approval from a landlord to do so!
You know Exactly what to Expect: There’s an added stability and peace of mind with that comes with paying a fixed-rate mortgage as opposed to rent. You are not subject to potential rent increases every 12 months and know exactly what to expect of your monthly payments.
Cons to Buying:
Be Prepared to Commit: As stated above, buying a home is a long-term commitment and therefore if you don’t plan on staying in one home for an extended period of time (roughly five years or more), owning may not be the right option for you.
Upfront Costs of Owning: Purchasing a home means you’ll need to allocate funds toward upfront closing costs associated with the property which can add up and may be a deterrent for some people.
Slow Return on Investment: Before you can reap the rewards of your home investment, you must be prepared to wait for a while before you see any return on your investment. Don’t expect a return right away. With homeownership, patience is truly a virtue.
Maintenance Costs: When you own the home, you’ll be responsible for covering the everyday and annual expenses and labor associated with general maintenance of the property.
It’s clear there are many factors to take into consideration when determining whether to buy or rent a property, but hopefully this list has been useful in helping you come to the right decision for you and your lifestyle! If you’re still torn and need more guidance on whether to rent or buy, I’m here to help!