The debate between whether you should rent or purchase a home is one that many people struggle with at some point in their lives. It’s a major decision that not only affects your lifestyle but also your financial health. There are several different factors that play into the rent vs. buy debate, from your current financial situation, living situation, and employment status to your ideal neighbourhoods, location, and housing expectations. The most prominent question that’s asked in this debate is what’s cheaper: buying or renting?
Below, we’ve broken down some of the key factors that will factor into your argument about the above question and help you decide whether renting or buying is the right choice for you.
Is Renting a Home Cheaper?
There are lots of benefits that come with renting your home that make it a great option for many people. When renting, you often have much more freedom when it comes to wanting to move, as you can avoid paying a penalty if you leave after your lease ends. You also know exactly what you are paying for when you rent; any major improvements or repairs that need to be made to your property will be at the expense of your landlord.
In general, rental payments are often lower than mortgage payments and sometimes include other expenses such as utilities, hydro, cable, and internet. Depending on what kind of property you’re renting, you can spend considerably less than you would if you were paying a mortgage, which can give you the opportunity to put some money elsewhere, such as into investments or paying down debts.
Is Buying a Home Cheaper?
While renting a home can be more cost-effective than owning a home, there are some benefits that come with owning that can be extremely beneficial long-term. One of the biggest benefits is the fact that by owning your home you build equity. This means that with every mortgage payment you make, you’re one step closer to owning your own home, which is something you won’t get with renting.
Another key benefit to owning your own home is that you don’t have to worry about having a landlord policing your every move. This gives you the freedom to do whatever you like with your home, whether that be giving every room a new coat of paint or deciding to renovate your bathroom.
Renting vs. Buying: How to Decide?
Ultimately, there are pros and cons to both renting or buying, so it is important to take your time when making the decision. If you like having the freedom to move easily in a year or two and don’t want to have to worry about maintenance costs, then renting might be the best option. If you’re wanting to put roots down in a specific area and are financially stable enough to handle the sometimes unexpected maintenance costs that go along with owning your own home, then you might be ready to buy!
Sitting down with a financial advisor or speaking with a realtor is a great way to start the process of deciding whether renting or buying is the best decision for you. A financial adviser will be able to help you determine how big of a mortgage you can be pre-approved for, while a realtor will have the knowledge of the current real estate market in your area to help you determine what neighbourhoods and property types are the best options for you should you make the decision to buy.