Many people aspire to own a home, but the reality of home ownership isn't all it's cracked up to be. Though you may feel pressure to buy, there are many reasons why renting might be a better decision for you. Here are 8 reason why renting is better than buying:
No Down Payment
One of the major obstacles to home ownership in Canada is saving up a sizable down payment. The amount of the down payment will depend on the price of the home, which will vary depending on what part of the country you wish to live in. What you need to earn to buy a house will also vary according to where you want to live.
One number that is consistent across Canada is the minimum percentage of the purchase price you need to put down. For homes priced at $500,000 or less, a minimum down payment of 5% is required. For homes over $500,000, 5% of the first $500,000 and 10% for the portion over $500,000 is required. For those in a position to purchase a home priced at $1 million or more, a 20% down payment is required. Any time the down payment is less than 20% of the purchase price, the buyer is required to buy mortgage loan insurance.
Premiums for mortgage loan insurance range from 0.6% to 4.50% of the amount of the mortgage and are payable for the full term of the mortgage (typically 25 years).
The average price for a home in Toronto in 2020 hit a record high of $930,000. That is definitely something you will have to consider when contemplating renting vs buying in Toronto or other major cities in Canada.
Maintenance and repair costs
One of the big benefits of renting vs buying a home is the lack of repair or maintenance costs. All of these expenses are rolled into your monthly rent, so there are never any surprises or hidden costs. If your appliances stop working, if there is a leak, if repairs and maintenance are required (and they will be) it's not the renter's responsibility. You simply contact the property management team or landlord. Homeowners are advised to set aside 3-5% of a home's value each and every year just for maintenance and repairs. When you rent, you can live relatively worry-free.
Additional costs of home ownership
The costs and fees keep coming when you purchase a home. Before a homeowner even moves in there are additional closing costs, insurance and other fees they must consider. Legal and administrative costs can total between 1.5% to 4% of the purchase price. There will also be home inspection fees, land transfer tax, and title insurance. Even after a mortgage is fully paid off, the property taxes never stop. Never-ending taxes and expenses are a big reason many people come down on the "rent, don't own" side of the equation.
Freedom to live where you want to
Another checkmark in the "rent don't buy" column is the freedom that renting a home can offer. As mentioned above, the average purchase price of homes in Canadian cities has never been higher. Renting makes it possible to live in a city that would simply be out of one's price range to purchase in. Renting your home also makes moving to a new place easier. If you get restless, need a change, or land a dream job in another city, giving notice on your rental apartment is much less complicated than breaking your mortgage contract early (and paying penalties), listing and selling your home, all while trying to find a new home to buy and move into.
Renters certainly experience more flexibility than homeowners. If at the end of your lease you feel like you need more space, or you want to downsize to a smaller home all you have to do is find another rental apartment, perhaps in the same building you already live in.
Property values are not your problem
Though we like to think of real estate as a safe investment that only increases in value, the truth is that property values can rise and fall. Renters are free to live their lives without having to worry about what the market is doing.
Another upside to renting your home is access to all the amenities and services of the property at no extra cost. You don't have to think about mowing a lawn or shoveling snow. You may have access to state-of-the-art fitness equipment, a swimming pool, outdoor patios, security services, and more. Condo owners would have to pay monthly maintenance fees, each and every month, on top of all the other expenses of homeownership.
Invest what you save
Home ownership can be a good investment over the long term. So can renting. If you take the money you save from renting and invest it wisely, you can do as well or better than if you put it all into owning a home. If you've decided that renting beats owning, Hazelview Properties is here to welcome you home. To find your home with Hazelview Properties, please visit our website.