Renting vs Buying: The Pros & Cons

When looking for a place to settle and call home many people have two options. Either to rent or buy a place to live. Now the decision comes down to the individual’s personal preferences and circumstances. Still, we’ve laid out some pros and cons for each option that everyone should consider before making a final decision.

 

Pros of Buying a Home:

1. You Build Your Own Equity

You earn equity when the difference between what you can sell the home for and what you owe grows as you pay down your mortgage. Over time, more of what you pay each month goes to the balance on the loan rather than the interest, building more equity. This in turn makes the house more valuable when selling the property.

 

2. Privacy

When renting you don’t always have the option to have privacy. Unless you rent a full house most rentals are apartments in a house or building, or a room that you share with others. You also might get notices from landlords for inspection checks or maintenance checks in your apartment.

Where if you buy, you are the landlord. It is your choice to buy an home surrounded buy neighbors or a relaxing quiet house with a backyard. Whereas a renter might not have that option for privacy.

 

3. Not Having to Ask for Permission

As a homeowner you don’t have the burden of following a landlord’s rules. Some rentals have restrictions on allowing pets. Some rentals, especially in an apartment building or a compact area, have noise restrictions or even guest restrictions depending on the landlord or other tenants.

 

4. Freedom to Make Modifications

When you own a home, you can do what you want to your home. You can adjust your house into your dream home. You can paint your walls, renovate your kitchen, and adjust your landscaping. It is your home to make your own.

 

5. Stability

This is a luxury that most homeowners get that most renters unfortunately don’t have. The stability of knowing that every day, month after month, their house is their own. They don’t have to worry about leases ending or being asked to move by a landlord.

 

6. Tax Benefits

You pay more taxes as a homeowner – but certain tax benefits can help you offset the cost. You can find more information from Canada Revenue Agency (CRA) or the Canadian Government website.

 

Cons of Buying a Home:

1. Higher Upfront Costs

On top of the mortgage, the general rule of thumb is to save at least 20% of the cost of your home as a down payment, including numerous fees such as property taxes, mortgage insurance, home inspection, first-year homeowner’s insurance premium and other costs. Depending on personal financial situations it can take a while to recover costs.

 

2. Difficulty Relocating

If one of the advantages of homeownership is stability, that means it may take more thought to accept an attractive job offer requiring you to pick up and move to another city. The offset to this concern is the speed with which homes are selling, and if it will sell at the cost you need it to sell at.

 

3. Counting Costs & Maintenance

When you own a home, you are the first line of repair. Sometimes repairs can be done by yourself, a friend or a family member but sometimes you need a professional. If your roof has a leak in it, not only will you be putting buckets all around your house, but you will be calling to find someone to fix it and writing the cheque to have it fixed. Some people enjoy yard work and others don’t. Not to mention the everyday and monthly upkeep of the property, which is something to consider when deciding to purchase.

 

Pros of Renting a Home:

1. No Maintenance Costs or Repair Bills

Renting a place means upfront costs are significantly lower than buying a home. Most rentals require the first and last month’s rent, which is comparatively a lot cheaper than a house mortgage.

Also, when renting you are generally not required to fix things when they start to break down. Instead of hunting down someone to fix things and pay for it, most tenants just have to call their landlord who then finds someone to do the repairs and pays the cost.

 

2. Predictable Home Expenses Each Month

With renting there is a sort of security in knowing what your monthly expenses will be including rent. For a landlord to increase rent they have to give a tenant at least 90 days written notice of rent increase.

 

3. More Flexibility as to Where to Live

If homeowners want to move, they need to figure out what to do with the house first. Whether that means selling or renting out their house it is more time and work for them to relocate.

Renters aren’t obligated to stick around once their lease is over. Typically, you have the option to renew your rental agreement, or you can move somewhere else. Some rental properties might even be short-term leases or may allow you to go month to month without signing another lease.

 

4. Few Concerns About Decreasing Property Value

Property values go up and down. While this may affect homeowners in a big way, it affects renters substantially less, if at all. Your home value can impact the amount of property taxes you pay and the amount of your mortgage. In a rocky housing market, renters may not be as affected as homeowners.

 

5. More Variety

When renting you have more options. From renting an apartment to a condo to a basement apartment, half a house, a whole house, to even just a room. Buying a property can offer fewer options and flexibility depending on the market, and usually requires you to purchase the whole property not just a portion.

 

6. No Property Taxes

Homeowners are required to pay property taxes that are calculated based on the value of their home and the local tax rate, which renters are not required to pay as that is generally left up to the landlord.

 

Cons of Renting a Home:

1. You Aren’t Building Home Equity

This is probably the biggest con in renting. When you are renting you are putting your money monthly to someone else’s mortgage. So instead of making monthly payments to your own mortgage which in turn will be an investment to you, you are essentially paying someone else’s mortgage which most of the time has zero investment for the tenant.

 

2. Less Control Over Your Living Space

When renting you don’t own the space where you live, therefore you can’t make certain changes without permission. Depending on the rental agreement, some rentals might not even let you change the paint colour. Doing so can violate your rental agreement and cause problems with the property owner. This could be a deal breaker for people who want to fully customize their homes to their liking.

 

3. Rent Can Continue Increasing

When your lease agreement ends, the landlord is permitted to up the rent, and the tenant is forced to decide either to agree to the new rent cost or find a new place. In comparison, having a fixed-rate mortgage on a home would lock in the principal and interest portions of your monthly payment over the life of the loan.

 

In conclusion, whether to rent or buy a home is a decision that hinges on various personal, financial, and lifestyle factors. While renting offers flexibility and lower upfront costs, buying provides long-term stability and the potential for investment growth. It’s essential to carefully assess your individual circumstances, consider market conditions, and weigh the pros and cons of each option before making your decision. Ultimately, whether you choose to rent or buy, what truly matters is finding a place that feels like home and fits your needs and aspirations for the future.

 

For more information on renting or buying, contact us today to get in touch with one of our Realtors!

 

The information in this blog is not legal advice, and its contents are not guaranteed or warranted.