Being a homeowner is something many Canadians aspire to at some stage in their lives. But is owning your own place everything it’s cracked up to be? We look at the pros and cons of renting vs. buying.
Everyone dreams of owning their dream house, the sort you’d find on Desperate Housewives‘ Wisteria Lane — white picket fences, beautifully manicured lawns, gourmet kitchens with granite benches, swimming pools and so on. While the idea of not having to pay monthly rent is appealing, before you leap into home ownership, you need to weigh the pros and cons.
Why being a homeowner would be cool
Creative licence
Decorating, renovations and landscaping are all your decision. If you want to paint the kitchen Big Bird yellow, knock out a few walls or dig up the backyard for a swimming pool, you don’t have to get permission from the property owner, because you’re it, baby!
Better credit rating
Provided you don’t fall behind on your mortgage payments, you will have a better credit profile, and financial institutions will be more willing to lend you money to make the renovations, landscaping or decorating a reality.
Personal wealth gains
Over the long term, you can add value to your home, particularly if it’s in a sought-after family area. You’re likely to make a profit when you sell, allowing you to upgrade to a nicer, larger home in a more affluent area.
Long-term security
You can put down roots and get your kids settled in a good school, knowing you’re going to be in the same house until you decide to sell or they carry you out in a cardboard box.
The not-so-cool aspects of being a homeowner
Money, money, money
It can be a huge financial commitment. We’re talking 25 years or more, depending on the amount you need to borrow from the bank. Not to mention it’s you who has to foot the bill when the hot water tank breaks down, the sewage pipes spring a leak or the roof needs replacing.
Extra costs
Taxes, insurance, rates, water — somebody has to pay these too, and that somebody is you. Add them all up every month, and your monthly outlay for rent is starting to look pretty cheap, right?
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Downsizing your dream
If you are a first-time buyer, it’s likely that what you can afford is not what you had pictured in your head. You might have to settle for a studio apartment in an average neighbourhood or a house that needs a lot of work to bring it up to your dream standards.
Risk
Whether it’s an economic downturn, high interest rates or financial factors you can’t plan for, there is always the risk of a financial loss when selling your property.
Why renting is cooler than home ownership
Flexibility
With a rental, you are locked into a fixed-term contract, and provided you give the agreed-upon amount of notice, it means you can pick up and move when you want to, without the burden of deciding whether to put your house on the market or to rent it out.
Simplicity
No need to worry about finding tenants to take over the lease. As long as you have fulfilled your side of the rental agreement and left the house as you found it, all you need to do is find somewhere new to live and move your belongings.
If it breaks, call the landlord
Whether it’s a leaky tap or a leaky roof, all you need to do is pick up the phone and alert the landlord. There’s no stress of wondering how you’re going to find the money to pay for a plumber.
Less financial commitment
No rates, no taxes, no insurance except for home contents, which means if the house is broken into, catches fire or floods, the insurance company should cover any losses. Plus there’s no guilt when you spend your money on a trip instead of building a new fence or redoing the driveway.
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The not-so-cool aspects of renting
No creative licence
If the carpet is bright orange and the wallpaper is straight from Noah’s ark, you’ll just have to grin and bear it. Without permission from the landlord, you can’t renovate, landscape or decorate.
Money down the drain
Basically you are paying someone else’s mortgage. It’s money you won’t see again, and you won’t reap the rewards from any improvements you make to the property.
No security
You are at the mercy of the landlord. You might fall in love with the neighbourhood and the house, but if the owners decide to put the house on the market, you might find yourself asked to vacate the property.
Restrictions
It can be hard to find properties that allow you to have pets, and even if you come to a compromise with the owner, not many landlords allow animals inside. This can be particularly difficult if you are an animal lover who treats pets like they are members of the family.
Now that you have more insight, you are one step closer to making an educated decision.
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