Renting and buying a home are two options to consider when deciding to move or plant roots. Both options have their benefits and the one that is right for you will depend on a variety of factors. We will focus on and highlight the benefits of each while you also take notice of the differences between them…Let’s compare the two:
Renting a home:
- Offers flexibility, in that, it allows you to easily (relatively speaking) relocate without having the burden of having to sell your existing property, penalties for breaking your mortgage, and other considerations that can make it a challenge.
- Lowers the initial costs of getting into your home because unlike with purchasing a home, you typically only need to provide a 1st and last month’s rent + a security deposit.
- Can be more affordable, especially in the short term to acquire a home that meets your needs without having to take on the financial responsibilities that come with owning the same home. These include financial commitments like mortgages, property taxes, and general maintenance costs that are the responsibility of the landlord.
Buying a home:
- Can build equity and is often considered to be an investment. When you purchase a home, you have the potential benefit of seeing the equity build over time as you both pay off your mortgage and the home appreciates with time. This appreciation is often attributed to general developments of the community, infrastructure, and population…
- Offers stability and security as you have complete (to an extent) control over your home and can live there for as long as you would like to. You are in essence your landlord and would never “evict yourself”. Of course, you need to keep up with your financial obligations such as mortgage and property tax payments.
- Gives you the freedom to customize your home by renovating it to meet your needs. This can be as simple as changing light fixtures, to remodelling your kitchen cabinets, and everything in between. You do not need permission from the landlord because once again, that would be you.
- Can serve as a financial parachute in times of difficulty or future need for capital. Most homeowners would tell you that the ability to refinance their mortgage to pay for renovations, their children’s education, weddings, etc. has been a significant tool in helping them achieve those respective goals. After all, borrowing money via real estate (mortgage) offers the lowest costs to borrow when compared to the unsecured alternatives that exist. It makes it easier to get a lender to give you $100k with collateral vs $100k without collateral (unsecured and considered high risk).
As mentioned above and like most things, there are pros and cons to each of these options, but some of those items may not have a material impact on your decision-making process. For example, you notice that owning a home allows you to “customize your home” whereas renting your home may not afford you the same level of customization. However, this may not be important to you. Thus, it is inconsequential to your decision making and you would focus on the other elements that you feel are more applicable to your needs.
If you’re on the fence about purchasing or renting your home and just need to talk it out…that’s no problem, we’d be happy to talk you through each scenario and help you determine what fits your lifestyle. Give us a ring! 905-455-5005