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The Age Old Question: Buying Verses Renting?

Real estate seems to be one of the safest investments today with great returns, but the age old question of buying or renting still plagues many Canadians. With interest rates at an all time low, it seems like a no-brainer that people should be buying, but there are other factors still to be considered that does not make either option a clear-cut choice.

The Good and Bad of Buying a Home

There are several advantages and disadvantages to buying your own home, but every individual should assess the pros and cons based on his or her own personal situation:

• Many home buyers feel a great sense of pride in home ownership because it can truly establish independence. Making one of the biggest financial decisions of your life and proving you can make it on your own two feet is enough to make anyone proud.
• You have your own space and the freedom to do what you want with it. (See: HRG)
• Investing in your future is a wise decision because home ownership can have many financial benefits. As current market trends see housing costs increasing, you are building equity in your home and adding to your personal net worth instead of "throwing" your money away as rent.
• If you have stability and plan to stay put for many years then home ownership makes sense.
• Owning a home is often as affordable as renting with interest rates at an all time low.

• If your future is uncertain and you plan to move within a few years, you will not likely recover the closing costs of buying a home. It might be to your advantage to rent until you have more permanent plans.
• A down payment is required to purchase a home along with funds to cover various closing costs, legal fees, etc.
• Additional costs on top of your monthly mortgage payment can include property tax, insurance, utility payments, landscaping, upkeep, repairs, renovations, etc.
• You may not be able to afford what you want and you might have to settle for what you can afford. This may also limit the areas in which you can purchase.

The Good and Bad of Renting

There are several advantages and disadvantages to renting, but every individual should assess the pros and cons based on his or her own personal situation:

• A down payment is not required to rent. Many people have difficulty coming up with enough money for a down payment which prevents them from buying a home. A damage or security deposit may be required to rent, but it is typically only one month's rent.
• You do not have to pay property taxes or other expenses such as utilities because they are often included in your rent.
• You have a better idea of what your monthly expenses will be and this can make it easier when living on a budget.
• You are not responsible when things go wrong with appliances, plumbing, etc. You can simply call your landlord and have him or her deal with the problem.
• More options might be available for desired areas, buildings, etc.

• You are not investing in your own future or net worth. You might be viewed as throwing your money away.
• You must adhere to policies and rules as outlined in a lease agreement.
• You do not own your own space.
• You could be subject to rental increases.