Renting Vs Buying a Home – The Debate Rages On

The debate rages on as to whether it is better to buy a home or rent it. Outlined in this article are 12 benefits to buying a home and 8 benefits to renting. The debate pretty well boils down to what is right for you in your situation. This article will help you to determine just that.

Outlined below are 12 benefits to buying a home as compared to renting:

1. Buying home is a great investment. Homes tend to increase in value, in the past 20 years the average Toronto home has increased 11% per year.

2. You are in complete control. You can make any changes or improvements you want. When you do spend the time and money to improve the house it is for your betterment not your landlord’s.

3. You can leverage your money. You can put down as little as 5% and the bank comes up with the rest, yet you are still in full control. That is as long as you maintain your mortgage payments.

4. You have the ability to step up to a better home by leveraging your existing home equity. This can typically happen without significant increases in monthly expenses.

5. Your monthly mortgage payments are like forced savings. In the early days the majority of the payment is interest but you are still increasing your equity position with each payment. You then withdraw these savings when you sell your home.

6. Protection against inflation. Assuming you have a fixed rate mortgage your payments will not change over the life of your commitment, even if inflation goes up.

7. You have the ability to live how you want to live, decorate how you want to decorate. You get to be the king/queen of your castle.

8. You do not have to pay capital gains tax when you sell your primary Toronto residence. This is not the same situation for an investment property, but there certainly are other tax benefits associated with investing in property.

9. There are great tax benefits on investment properties. Even if the property is not your primary residence there are some significant tax deductions that that make this a very favourable investment strategy.

10. Typically when you buy you get more space than when you rent. This is not always the situation but it often is.

11. It is usually quieter in a Toronto home that you bought than a Toronto apartment that you rent. Many apartment buildings are just thrown up these days with paper thin walls. car

12. The monthly costs of owning a place are often just a little bit more than what you would pay in rent for an equivalent space. As you pay those monthly expenses you are bettering your home equity position as opposed to paying down your landlord’s mortgage.

Outlined below are 8 benefits to renting as compared to buying:

1. If you tend to like to move around than buying may not make sense since there are some decent size expenses associated with buy and selling a property. You also are more susceptible to basing your move around market conditions.

2. You may not be able to afford the down payment. First an last is much more affordable than 5-25% of the value of a property.

3. If there is a possibility that you will lose your job and not be able to make your mortgage payments. The downsides of missing your rent are much less than if you miss mortgage payments.

4. If you think you may be getting divorced you should wait to purchase a home. Not only is it a real hassle to deal with, it is unlikely that your home will have appreciated by the time you are forced to sell.

5. If you have had bad credit. You will need to reestablish your credit before you apply for a mortgage. It is highly recommended that you run a credit check on yourself before you go to your bank.

6. You may not be able to afford buying. There is nothing wrong with that, don’t make yourself house poor, just wait.

7. If you think the housing market is going down you may want to wait until it hits bottom and starts to bounce back. But be careful as by the time it is bouncing back the financial gains to buying in the slump may be lost.

8. You may just not want to have to deal with the inevitable maintenance of a home. As a renter all you have to do is call the landlord.

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