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
- Without the added expenses from property maintenance, renting a home can be less costly in the short term.
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?
- 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
- 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.