Have you been renting your apartment for a while and are looking for a change? The next logical step would be to buy a home, right? Buying a home is perhaps the largest financial purchase you will make in your lifetime. However, with housing prices at unprecedented levels, countless Canadians are becoming homeowners later in life – if at all. If you are in the market for a new place to live, you’ll likely be confronted with the age-old question: should you give up your homeownership dream and just enjoy the perks of renting? Or should you take the leap towards buying a home? At the end of the day, we all need a place that we can call home. Choosing to rent an apartment or purchase your very own home, sweet home, is often dependent on your lifestyle, current financial situation, and long-term goals.
Are You Ready to Own a Home?
Home readiness refers to the state of being personally and financially prepared for all the challenges and rewards of homeownership. Purchasing a home requires three important facets: planning, saving, and patience. By having a financial plan in place to save for a down payment and understanding the costs involved in purchasing property, you can ensure that you’re prepared for the financial and emotional responsibilities of being a homeowner. But if not, renting might be your best bet, for now.
The Case for Renting Your Home
For some Canadians, choosing to rent their home instead of buying might better suit their lifestyle and current personal and financial goals. Is committing to staying in one place for a long time difficult for you? Well as a renter, that’s no problem! Renting provides you with the flexibility to move out of one residence and into another at short notice. So, if your current neighbourhood is too noisy, requires a long commute to work, or isn’t close enough to your favourite go-to spots, you can move out with ease. Also, as a renter, your monthly rent encompasses some, or all, of your home expenses, without the added worry of having to pay for unexpected house repairs. So, whether you are renting at 20 or 40 years old, a great benefit is knowing that when something breaks, you can contact your landlord and they’ll be on the financial hook for it. These financial savings mean more money in your pocket that you can put towards your personal savings for an eventual down payment, an RRSP contribution or your next vacation. Now, that’s a win-win!
While renting can offer you the flexibility to move whenever you want and can be more financially affordable upfront, it comes with its own set of drawbacks. As a renter, you do not have the freedom to make modifications or home improvements to your space without your landlord’s consent. You may also be forced to move if the landlord decides to sell.
The Case for Buying
Have you saved up enough money for a down payment to purchase a home? Are you ready to settle down and put down roots in a community? After a thoughtful analysis of your financial and personal circumstances, it might just be the right time to buy instead of rent. While buying a home is costly, as a homeowner your monthly mortgage payments reduce the amount of money you owe on your home and increase your equity,unlike rent which goes to someone else. Through each monthly mortgage payment, you move one step closer to obtaining full ownership of your home and seeing the value of your home appreciate over time, meaning more money in your pocket when you decide to sell. Purchasing a home also gives you the power to make cosmetic changes to your home without requiring anyone else’s permission to do so. So, if you want to paint, renovate, or decorate your home, go right ahead – you’re the boss!
Buying a Home: Drawbacks
Now, before you pull the trigger on that home you have got your eye on, there are a few factors to consider before making that purchase. From mortgage payments and property taxes to unexpected home repairs and ongoing maintenance, the daily costs of homeownership can cause a lot of emotional and financial stress. Compared to renting, being a homeowner can tie you down to one location for an extended period, especially if you are looking to get the most out of the money you’ve invested. If you’re planning to move in a few years’ time, then think twice before committing to buying a home. Unexpected shifts in the market can happen at any time, which can impact the value of your home when it comes time to sell. This could mean that if you sell your home during an economic downturn, you might end up losing money on your investment.
Make a credit union part of your savings strategy
Credit unions are an excellent option to help you save towards owning a home, whether your timeline is sooner or years ahead. Not yet a credit union member? To find your nearest credit union, click here.