Does the question to rent or to buy ever cross your mind? Well, there is no real right or wrong answer since it truly depends on your financial situation, your long-term goals, and your preferences. Renting or buying property is a serious life decision— one that needs to be analyzed carefully, but there are some key benefits of homeownership that you just don’t get with renting. So here are the top 3 reasons to buy your first home, as well as some important factors that you should consider before taking the plunge!
REASON #1: BUYING A HOUSE HELPS YOU BUILD EQUITY
Buying a house means that you are making payments to your mortgage every month, which builds equity. This means you are closer than you think to owning your own home. Now, if you are thinking about renting, the downside to this is that your money is going towards helping to pay somebody else’s mortgage. However, there is an advantage of renting; you don’t need to worry about any extra bills, like unavoidable repairs. This is fully up to your landowner to deal with the responsibilities and headaches.
REASON #2: BUYING IS A COMMITMENT
Equity is not the only factor that you should mull over. Ownership is a long-term commitment and usually means you’re sticking around for the long haul. Depending on your future goals, this can be both a positive or negative choice.
Some people prefer not to feel trapped with their place, whereas others are more comfortable settling down for the long run. This is entirely based on preference too. You can’t sell your house or break your mortgage, without heavy penalties.
However, owning a home means you have the freedom to customize your space! You can knock down a wall to redo the master bedroom or paint your child’s room their favourite colour without worrying about your landlord or security deposit!
Therefore, it is crucial to evaluate your current situation to see if you will be able to carry out such a role. Should this not be the case, renting is your best bet!
REASON #3: YOU’LL HAVE STABILITY
In a rapidly changing economy, your rent payments will fluctuate—it is inevitable. Your landlord has every right to increase the rent and this can come as a surprise to many.
People rent places that go according to their salary. It is encouraged that people follow a specific guideline, which is that your house expenses should not surpass 30% of your monthly gross income. Let alone, your rent, should be less than 30% because it is only a portion of your house expenses.
So, what happens when your rent payment exceeds that rule? This defeats the purpose of renting because it should leave you time to invest elsewhere. However, this is impossible with a hike in rent.
On the other hand, buying property is a much more stable option because you will always have the same mortgage payments. Unlike rent, a fixed mortgage can never go up. By buying a house you can afford, your payments will never be unstable and this will prevent you from any financial crisis. Note that stability also stems from having a reliable job.
Stop with the controversial debate on renting vs. buying and get down to business. Your financial circumstances, personal goals and preferences will determine what is right for you. Although buying a house can be a valuable asset, it can also be your biggest liability. When in doubt, consider other options—as the old saying goes, better safe than sorry!
As always, our blog is your go-to place for expert tips on home-buying, saving, and taking charge of your financial situation! And if you’re in need of some quick cash, apply now at Eastern Loans for same-day deposit!
https://www.rbcroyalbank.com/mortgages/how-much-can-you-afford.html
https://www.cnbc.com/2018/06/06/how-much-of-your-income-you-should-be-spending-on-housing.html
https://youngandthrifty.ca/rent-vs-buy-property-canada/