Buy or Rent?

Contemplating between whether to rent or buy? You’re not alone in this debate. Millions of Canadians face this big decision in the real-estate market today, and we’re here to help you break it down.  What are the pros and cons of buying a home, versus renting one? What documentation do you need in either situation?

Renting your Home

 Renting a home is nowhere near as involved to that of buying a home, but it does come with its own advantages and disadvantages. Is renting a home the right choice for you?

Advantages of Renting:

  • Property maintenance
    • The added expense and work involved with property maintenance is often the responsibility of the landlord
  • Secure buildings
    • In the case of apartment buildings, they typically have a two-door system in place, with the inside door only allowing residents to open the door, and a call system for guests to contact the individual they are there to see.
  • Short term commitment
    • You can rent month to month in some places, or sign short term leases (such as a 1-year lease) giving you the freedom to move should you choose to.
  • At times, lower monthly costs than home-owning

Disadvantages of Renting:

  • Pet policies
    • Some landlords do not allow pets, or have strict policies in place, including a pet damage deposit that can vary depending on the number, and type of pets you have.
  • Damage deposits/Security deposits
    • Landlords may require you to pay a damage/security deposit upfront. These deposits tend to be refundable, should there be no damage upon moving out.
  • Needing to pay first & last upfront
    • Renting requires you to have both your first & last months rent paid to your landlord before you move in.
  • Maintenance is not in your control
    • If something breaks, you need to contact your landlord to have them fix/schedule the repair
    • Snow removal, and general building outlook are also out of your control
  • Less privacy (neighbours)
    • Apartment buildings especially, mean having upstairs/downstairs neighbours which can give you less privacy, and control over noise.
  • Parking issues/limited parking
    • Depending on your location, some apartments/rental homes will have limited parking (due to being “in-town/downtown”). This may require you to pay for a parking space.
  • 2-3 Personal/Professional References
    • Some landlords require letters of recommendation from these individuals, while others just require their contact information

Purchasing a Home

Purchasing your first home is a large decision for many people, and an exciting time for all involved – is buying a home the right choice for you?

Advantages of Purchasing

  • Creative freedom
    • You can create your home to be whatever you wish it to be. No more asking permission to paint, or change anything from a landlord
  • Building equity
    • As you pay your mortgage, renovate your home etc. it continues to build equity, and increase in value at times.
  • Property maintenance
    • Property maintenance, including snow removal is in your control. Ensuring you have whatever you need scheduled and done at the times that are most convenient for you
  • No damage deposit/security deposits needed
  • Predictable and stable monthly costs
  • Greater Privacy
    • No more upstairs neighbours disturbing your peaceful evening.
  • Guaranteed parking

Disadvantages of Purchasing

  • Long-term financial commitment
    • Buying a home is a long-term commitment, unlike having a 1-year lease that you can move at the end of its’ term, in order to move you will need to sell your house. Selling a home too early in your mortgage can result in penalties.
  • Being responsible for your property maintenance/snow removal
    • You no longer have a landlord to organize snow removal, so when it snows 30cm overnight, you’re responsible for getting out of your driveway…Grab your shovel!
  • No landlord to call to fix something when it breaks
    • Repair companies can be costly, should something break that you are unable to fix yourself.
  • Saving your down payment
    • Down payment is typically 5-20%of the value of the home you are purchasing. First time homebuyers can qualify for 5% down with CMHC.

What do you need to purchase a home?

  • Closing costs for the transaction (legal fees involved)
  • Down Payment
  • Mortgage
    • Typically getting pre-approved for a mortgage/credit is ideal when looking into buying a home. This lets you know exactly how much you can borrow, and what you can afford
    • You’ll need proof of income, paystubs, employment history, total savings and investments values…
  • A realtor that is right for you

Whether you’re at a place in life to purchase a home now, or want to be prepared for the future, make sure you keep in contact with your realtor age. A realtor can keep you up to date on homes in your price-range, preferred locations, and even help you find the right home to rent should you not be ready to purchase.