For some people, the math of home ownership fails to add up all the time.
Take the case of Craig, who is 29 and working as an accountant in Winnipeg. He earns an average salary and has some $15,000 lying in the bank. Should Craig apply for a 5-year mortgage? Of course, he doesn’t think he is ready for home ownership.
Let’s put the economy and housing market in Canada into perspective. As the housing prices skyrocket, incomes, especially for young people, are not increasing equally fast.
Some six years ago, the obvious advice to Craig would have been to put the $20,000 as down payment for a home. But today, houses are extremely expensive and many young adults prefer to continue renting.
Renting is simply too enticing and simple for the following reasons:
Stay Anywhere, Anytime
When you find a pleasant neighborhood, you can choose to stay there for as long as you want. Do you hate the commute chaos, lack of bars or the noise? No worry-you can decide to pack your things and look for a better neighborhood.
A mortgage may not make sense if you are in a kind of job where you have to move every couple of months.
Home Maintenance Is Not In Your To-Do List
If you have any repair needs in the house, just pick the phone and they will fix it-if you are a tenant. However, for homeowners, expenses such as water damage, leaky roofs and shrubbery replacements are the norm.
Home Buying is Costly
Maintenance and repair costs aside, home buying is an epitome of other expenses that include inspections, property transfer tax, and legal fees.
Take for instance my experience when buying my present home in Alberta. Initially, I thought I was only going to pay the purchase price and legal fees. Yes, I paid these fees but I had to cater for more expenses- Moving my things for several hundred miles, appliances, water quality inspection, title insurance and some fee called GST.
How do you avoid paying these excessive fees? Simply rent a house and live happily.
Owning a Home Is Nice Too…
Pride and Freedom of Ownership
The fact that I have my own home gives me immeasurable happiness. Studies have shown that 70 percent of Canadians want to own a home and enjoy everything that comes with it. Do you want to paint your home amber? Or change the position of the deck? These are all things you can do if the home is all yours.
Your Money At Work
In renting, all that you pay ends in someone else’s account, for good. I consider a mortgage as almost the direct opposite of that. A portion of your mortgage payment goes to pay for the principle. Home values are increasing in most places. It’s like you are investing for the future with a mortgage.
Choosing between home ownership and continuing to rent is not difficult as long as priorities in life are clear. For a young Canadian, buying a home may not be in the immediate plans. However, for older and more financially stable people, having a home is more of a necessity than a choice. If you are wanting to purchase a home but not sure if you can afford it; check out our Mortgage Affordability Calculator. Compare mortgage rates and find some of the lowest interest rates in Canada.