Buying vs. Renting
This year, Ontario consumers are can count themselves
lucky in one important aspect: they are living in time that
offers unequalled opportunities to realize the dream of home
ownership.
Interest rates are among the lowest in decades and the
availability of housing of all varieties is at the highest
level in years.
In fact, in many situations, renting a family dwelling can
actually be more expensive than buying. If you consider a
$150,000 mortgage at 8 per cent for a 5-year term, the
monthly payments would be less than $1,200 per month.
Compare this to renting a suitable three bedroom apartment
or townhouse in many urban centres, and it's easy to see
that buying a home has become an attractive alternative.
If you take a $100,000 mortgage at the same rate and term,
the payments shrink to less than $800 per month. Even
better, if you're willing to accept a one-year term, the
interest rate drops at least two percentage points. This
would peg a $100,000 mortgage at only $650 per month and a
$150,000 mortgage at around $975.
There is another important benefit to home ownership that
often gets overlooked. Over the course of 25 years (the
usual amortization period for mortgages), the total amount
of money paid by many renters can actually exceed the amount
paid by a home owner. This is due not only to the fact that
mortgage payments can be cheaper than rent, but because
rental fees generally increase over the long term. Of
course, interest rates may also rise, but so probably will
the value of the property. Therefore, additional equity will
be gained.
Add to this the reality that after a mortgage is paid off,
homeowners will no longer make monthly payments while
renters will continue to bear the burden for the rest of
their lives. This savings can greatly impact your quality of
life upon retirement.
These figures are only intended as broad examples. The fact
remains that money spent on rent is still money down the
drain.
Regardless of the number crunching, the bottom line is that
owning a house is the best way to assure the happiness and
well-being of you and your family. A home gives a family
room to grow, and room to prosper.
The best childhood memories many of us hold include Sunday
dinners in the family dining room, retreating to the rec
room when friends visit, or skating on the backyard rink
throughout the cold winter months.
If you've made the decision to buy, the first person you
should talk to is a Realtor. These real estate professionals
will help you with virtually every aspect of your home
ownership needs. From putting together a 'buying blueprint'
that details your specific housing requirements, to giving
advice on what you can afford, a Realtor can cut through the
complexities.
Constructing a 'buying blueprint' is a critical step for
first time buyers. In it, you will list items such as: how
many bedrooms do you really need; is a finished basement a
necessity or can you afford to wait; how big a yard do you
need; and most importantly, where do you want to live? All
these considerations will affect your ability to buy.
For example, many first-time buyers will forego a property
close to the downtown core in favour of a suburban or even a
rural home. This can lead to huge savings which can be used
to either lower the mortgage and monthly payments, or to
acquire a bigger home for the same cost.
Opting for a townhouse or resale home are other alternatives
that can help first-time buyers escape the 'rent trap' and
channel their funds into a solid investment.
When you've narrowed your requirements, a Realtor will scout
properties for you and make recommendations on homes that
suit your needs. Once you begin viewing, your Realtor will
accompany you, offering advice on matters such as the
amenities of the neighbourhood, repairs or upgrades that
could be necessary, building inspections, carrying costs and
so forth.
So, if you're one of the thousands of Ontario families
caught in the cycle of paying rent and seeing nothing in
return, now is the time to make a move. Buying a home can
pay off in so many ways--you simply can't afford to pass up
the opportunity.
Information provided by the Ontario Real Estate Association.
