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. And the strategy is often viewed as a safe one and wise retirement savings vehicle. The ratio between rents and homes prices is one good gauge of housing affordability.
The biggest factor, apart from the overall price, is often the mortgage rate a homebuyer receives in order to finance it.
One way to tell whether it's better to rent or buy is by checking the price-to-rent ratio (or P/R ratio). Using this number, you can get a rough idea if houses in your locale are priced fairly. It is easy to calculate the P/R ratio. All you do is find two similar houses (or condos or apartments), one for sale and one for rent. Then, divide the sale price of the one place by the annual rent for the other. The result is the P/R ratio.
You benefit in many ways when you sign a lease on a place to live. 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. Any issues with the property's plumbing, fixtures, or lighting are normally handled by your landlord or building supervisor. You might to choose to rent somewhere that the initial rent payment includes utilities and amenities, so you avoid extra bill payments. The yard work might be done for you.
Naturally, home ownership offers many advantages:
Instead of making a rent payment, you make a payment on the house and work closer to owning something rather than investing in a property you may eventually leave.
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. If your home is historic, there may be tax breaks for restoration.
We haven't decided yet about putting in a bid for where we live yet. When we do decide, however, I feel we'll be well informed of the advantages of doing either.
Be realistic when talking about home ownership. 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. Buy a home if you want to. But don't let anyone persuade you that you're throwing your money away by renting.
The biggest factor, apart from the overall price, is often the mortgage rate a homebuyer receives in order to finance it.
One way to tell whether it's better to rent or buy is by checking the price-to-rent ratio (or P/R ratio). Using this number, you can get a rough idea if houses in your locale are priced fairly. It is easy to calculate the P/R ratio. All you do is find two similar houses (or condos or apartments), one for sale and one for rent. Then, divide the sale price of the one place by the annual rent for the other. The result is the P/R ratio.
You benefit in many ways when you sign a lease on a place to live. 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. Any issues with the property's plumbing, fixtures, or lighting are normally handled by your landlord or building supervisor. You might to choose to rent somewhere that the initial rent payment includes utilities and amenities, so you avoid extra bill payments. The yard work might be done for you.
Naturally, home ownership offers many advantages:
Instead of making a rent payment, you make a payment on the house and work closer to owning something rather than investing in a property you may eventually leave.
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. If your home is historic, there may be tax breaks for restoration.
We haven't decided yet about putting in a bid for where we live yet. When we do decide, however, I feel we'll be well informed of the advantages of doing either.
Be realistic when talking about home ownership. 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. Buy a home if you want to. But don't let anyone persuade you that you're throwing your money away by renting.
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