Should you buy your home, or rent it? Two-thirds of Canadians own their own homes, official data shows, so it's clear that for the most part, Canadians prefer to purchase their homes. Often viewed as a safe strategy, it is generally also seen as an effective vehicle for retirement savings. One good gauge of housing affordability is the ratio between rents and homes prices.
The mortgage rate that a homebuyer gets in order to finance the home is often the biggest factor, after the overall price.
One way to tell whether it's better to rent or buy is by checking the price-to-rent ratio (or P/R ratio). This number gives you a rough idea whether homes in your area are fairly priced. It is easy to calculate the P/R ratio. Simply find one house, condo or apartment that is for sale, and another similar one that is for rent. Next, divide the first place's sale price by the other's annual rent. The result is the P/R ratio.
You benefit in many ways when you sign a lease on a place to live. There is no worry about selling the home at a later date and waiting for somebody to buy before you can buy another home, if you are living in the home temporarily. Also, your landlord or building supervisor normally handles any problems with the property such as plumbing, fixtures, and lighting. Many utilities and amenities may be covered for you in the initial rent payment, cutting out extra bills, depending on where you rent. The yard work might be done for you.
Buying a home, of course, gives an owner many advantages:
Instead of making a rent payment, you make a payment on the house and work closer to owning something rather than investing in a property you may eventually leave.
When you own, you do not have any restrictions. Without worrying about caulking up the holes later, you can do things like paint a wall, make additions, and hang pictures.
You may have an easier time come tax season. You could receive tax breaks on restoration if you buy an historical home.
We haven't decided yet about putting in a bid for where we live yet. When we do decide, however, I feel we'll be well informed of the advantages of doing either.
Discussions of homeownership should be grounded in reality. A home purchase won't solve your financial challenges. You can waste just as much as if you were renting, and you lose a lot of the flexibility and freedom you might otherwise enjoy. If purchasing a home is something you want, do it. But don't listen to people who tell you that your money is wasted on rent.
The mortgage rate that a homebuyer gets in order to finance the home is often the biggest factor, after the overall price.
One way to tell whether it's better to rent or buy is by checking the price-to-rent ratio (or P/R ratio). This number gives you a rough idea whether homes in your area are fairly priced. It is easy to calculate the P/R ratio. Simply find one house, condo or apartment that is for sale, and another similar one that is for rent. Next, divide the first place's sale price by the other's annual rent. The result is the P/R ratio.
You benefit in many ways when you sign a lease on a place to live. There is no worry about selling the home at a later date and waiting for somebody to buy before you can buy another home, if you are living in the home temporarily. Also, your landlord or building supervisor normally handles any problems with the property such as plumbing, fixtures, and lighting. Many utilities and amenities may be covered for you in the initial rent payment, cutting out extra bills, depending on where you rent. The yard work might be done for you.
Buying a home, of course, gives an owner many advantages:
Instead of making a rent payment, you make a payment on the house and work closer to owning something rather than investing in a property you may eventually leave.
When you own, you do not have any restrictions. Without worrying about caulking up the holes later, you can do things like paint a wall, make additions, and hang pictures.
You may have an easier time come tax season. You could receive tax breaks on restoration if you buy an historical home.
We haven't decided yet about putting in a bid for where we live yet. When we do decide, however, I feel we'll be well informed of the advantages of doing either.
Discussions of homeownership should be grounded in reality. A home purchase won't solve your financial challenges. You can waste just as much as if you were renting, and you lose a lot of the flexibility and freedom you might otherwise enjoy. If purchasing a home is something you want, do it. But don't listen to people who tell you that your money is wasted on rent.
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