It’s a question of value
Home ownership is considered the ideal for so many reasons. Stability, intergenerational wealth creation, and security in retirement are just a few reasons why people buy a home. Renting a house or apartment has it’s own benefits, such as low-maintenance, rent control, and the ability to move without the expense of selling. Let’s compare the two and see which one might be best for your situation.
Own
- Added costs such as mortgage interest and property tax
- Pride of ownership, flexibility
- Build equity through mortgage payments
- Make improvements or customize
- Appreciation is not guaranteed
Rent
- Fixed monthly cost, all-inclusive
- Freedom to move at any time
- Discipline to invest is required
- Limited opportunity to customize
- Rent controls limit increases
When you’re comparing the two, ask yourself which scenario suits your lifestyle better. Buying a home is a popular choice and best suited for those who want to live in the same property for 7-10 years. If you’re intending to buy and then move within 7 years, your costs can exceed the appreciation (depending on area), which means that renting is the most cost-effective choice.
A larger down payment . . .
- 20% or more down eliminates the need for mortgage insurance – a savings up to 4% of the purchase price
- Reduces the amount of your monthly principal and interest payment
- Reduces the total amount of interest you pay over the life of your mortgage
Mortgage insurance
CMHC, Genworth Financial, or similar companies insure mortgages up to 95% of the lending value of the house. Eligible borrowers include anyone who buys a home in Canada intending to occupy it as their principal residence. Buyers who insure a mortgage loan with CMHC or Genworth pay a premium. The premium is based on the down payment and loan amount.
Contact our office for more information.
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