Is it better to rent or buy your home? For the most part, Canadians are in favour of home-buying, as official data shows that two-thirds of Canadians own their own homes. Often viewed as a safe strategy, it is generally also seen as an effective vehicle for retirement savings. A solid indicator of housing affordability is the ratio between home prices and rents.
Beyond the overall price, the biggest factor is often the mortgage rate a homebuyer gets in order to finance it.
When deciding if it's more advantageous to rent or buy, one can look at the price-to-rent ratio (or P/R ratio). This figure helps you to see if the prices for homes in your area are fair. Figuring a P/R ratio isn't tough. All you do is find two similar houses (or condos or apartments), one for sale and one for rent. Next, divide the first place's sale price by the other's annual rent. The resulting number is the P/R ratio.
When you sign a lease on a place to live, you benefit in many ways. If you are living in the home temporarily, there is no worry about selling the home at a later date and waiting for somebody to buy before you can buy another home. If there are problems with the property - plumbing, fixtures, lighting - your landlord or building supervisor normally handles them. Depending on where you rent, many utilities and amenities may be covered for you in the initial rent payment, cutting out extra bills. Lawn care may be taken care of.
Of course, an owner gets many advantages when buying a home:
Rather than investing in a property you may eventually leave, and making a rent payments, instead you make a payment on the house and work closer to owning something.
When you own, you do not have any restrictions. You are free to paint, renovate, and put up paintings without having to put it all back later.
It may be easier for you at tax time. You could receive tax breaks on restoration if you buy an historical home.
We haven't decided yet about putting in a bid for where we live yet. I feel we'll be well informed of the advantages of doing either, when we do decide.
Discussions of homeownership should be grounded in reality. Owning your home is not a silver bullet for your finances. You lose a lot of the flexibility and freedom you might otherwise enjoy, and you can waste just as much as if you were renting. If purchasing a home is something you want, do it. But don't believe people who say renting is a waste of money.
Beyond the overall price, the biggest factor is often the mortgage rate a homebuyer gets in order to finance it.
When deciding if it's more advantageous to rent or buy, one can look at the price-to-rent ratio (or P/R ratio). This figure helps you to see if the prices for homes in your area are fair. Figuring a P/R ratio isn't tough. All you do is find two similar houses (or condos or apartments), one for sale and one for rent. Next, divide the first place's sale price by the other's annual rent. The resulting number is the P/R ratio.
When you sign a lease on a place to live, you benefit in many ways. If you are living in the home temporarily, there is no worry about selling the home at a later date and waiting for somebody to buy before you can buy another home. If there are problems with the property - plumbing, fixtures, lighting - your landlord or building supervisor normally handles them. Depending on where you rent, many utilities and amenities may be covered for you in the initial rent payment, cutting out extra bills. Lawn care may be taken care of.
Of course, an owner gets many advantages when buying a home:
Rather than investing in a property you may eventually leave, and making a rent payments, instead you make a payment on the house and work closer to owning something.
When you own, you do not have any restrictions. You are free to paint, renovate, and put up paintings without having to put it all back later.
It may be easier for you at tax time. You could receive tax breaks on restoration if you buy an historical home.
We haven't decided yet about putting in a bid for where we live yet. I feel we'll be well informed of the advantages of doing either, when we do decide.
Discussions of homeownership should be grounded in reality. Owning your home is not a silver bullet for your finances. You lose a lot of the flexibility and freedom you might otherwise enjoy, and you can waste just as much as if you were renting. If purchasing a home is something you want, do it. But don't believe people who say renting is a waste of money.
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