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Do you enter into an agreement with another individuals, where a payment is taken for the use of property, renting? Or, do you purchase and take on all the responsibilities to a property, buying? What are the advantages and disadvantages between renting and buying a home? Through websites, videos and images you will get an understanding as to which concept work for each individuals and why.

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What is the better scenario, renting or buying property? This website explains the advantages and disadvantages individuals may face when contemplating this question. Outlining the challenges, you may face; how much money you will need for a minimum down payment? With renting there is low maintenance, no expected costs and you are not locked into one place, but may seem like you are throwing away money. Owning you can change your living space and call it your own, and your building equity, but requires more responsibility, and higher costs. It also explains the advantages and disadvantages for a retiree and just like a first-time buyer, buying is the way to go.

The reason I choose this website because I found that the information was very useful. Seeing the difference between renting and buying through actual number comparisons helped me understand that the money you would spend in a year of renting is not that much different from the money spent owning, therefore if you can rent you can save a little more to own.

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RENT OR BUY TORONTO 2019 With every passing year it seems that, for many, the dream of moving from renting to buying a home in Toronto slips farther and farther away.

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This website explains why renting is not throwing away your money anymore than owning is and a comparison between the two are dependent on unrecoverable cost.  For renting, you are paying for a place to live, but you’re not building equity. As for owning, your costs go to property tax and maintenance costs which is easy to see unlike the cost of capital. The money that you use to make a down payment or build up home equity it could be used to invest in stock instead of buying a real estate asset. Stocks have a higher return compared to real estate that most homeowners have a hard time understanding the opportunity that is there. Looking at historical returns and understanding the five percent rule, the context of unrecoverable cost is an influential means to owning property.

The reason I choose this website was because I the idea that homeowners also pay a form of rent was interesting. I found that knowing the unrecoverable costs for both renting and owning was something that other websites did not discuss.

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Should you rent or buy a home in Canada’s current real estate market? Here’s how the 5% rule changes the debate

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Stocks have higher expected returns than real estate, which means that there is an opportunity cost on the equity that you have in your home. This is one of the most important unrecoverable costs for a homeowner to grasp

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This website is an assisting tool that allows you to calculate what you can actually afford when choosing between renting or buying. Can you afford that down payment or that mortgage payments? Are you choosing the right interest rate or the right term? Is that amount you think you will pay in property tax is that correct? These are all factors that are available to help you in your financial decisions. Also, all the important key terms are at your disposal to help you make the best choice.

Instead of just reading about renting or buying and making your decision based on other individuals experience or opinions, I choose this website because it gives you and informed visual at what you are really working with when you are deciding to either rent or buy. Inserting the numbers gives you a concrete idea of what you can afford. And, it’s good information to have before you approach a lender.

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Information and interactive calculators are made available to you as self-help tools for your independent use and are not intended to provide investment advice. We cannot and do not guarantee their applicability or accuracy in regards to your individual circumstances. All examples are hypothetical and are for illustrative purposes.

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What I learned about this topic that surprised me was despite what we were told in the past, when it comes time to move out on our own, we should buy, not rent. We are throwing away money by renting but that whole concept is false. There are several advantages to renting that frankly, out weigh owning a home. Why would you want to contribute to someone else’s mortgage when you can contribute to your own? This may be sound realistic, but when you actually compare the two and crunch the numbers you see that renting is not a bad investment. Knowing little things like

I have been thinking for a while about moving out and my first instinct was to finish school, get a well-paying job, and buy a condo or a semi-dethatched home, but after going in-depth with this topic I am on the fence. I still want to own a home but maybe its something that comes later on in life. After I’ve tried renting and saved some money for the future.

If I could pass on my knowledge about this topic to a family member or friend, I think I would tell them to get that idea of owning being the better option out of their head. That its okay to rent, you’re not throwing your money away. I know that you may feel like this is the best way to make money but you can do the same thing through renting. With renting you are not What your actually doing is saving to invest in

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This website summarizes the rent vs. buy debate. Taking in to consideration all the variables that contribute to one’s decision. The benefits and downside of renting vs. buying. Comparing the cost of renting to a mortgage payment by the neighborhood you choose? How stable your employment situation to determine on what you can afford? When is the best time to buy?  All of these factors, plus many more help you construct a plan to determine which is best. This website never made the decision for you telling you one is better than the other. But gave you the information and tools you would need to make an informed decision on your own.

I choose this website because it never made you choose between renting and buying. The advantages and disadvantages were outlined for both scenarios for the reader to make their own informed decision.

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Last Updated on

Once upon a time, buying a home in Canada was simply a milestone in the life of the average Canadian. But times have changed: prices have skyrocketed, and housing markets have exploded, particularly in Vancouver and Toronto, making homeownership difficult and calling the investment potential of real estate into question. Simultaneously, the surge of remote work situations and the shift to a global economy have made the portability of renting an attractive choice. It's left many Canadians with rent vs. buy debate.

With so many variables-personal and financial-in play, whether to rent or buy may well come down to your financial circumstances, future goals, and personality. This article outlines some of the considerations when deciding to rent or buy a home.

Benefits of Owning Your Own Home

There are a gazillion reasons why homeownership has serious appeal (not dealing with nosy landlords is definitely one of them). Here are some of the common benefits of owning your own home:

You build equity: When you make a mortgage payment, you build equity (the portion of your home that you truly own and isn't encumbered by a mortgage). So each monthly payment takes you one step closer to owning your own place - something renting can't give you.

It's generally a good investment: Homes usually go up in value, so if you buy a home within your budget, the payoff can be plenty down the line. The general rule is to hold onto a property for five years or longer in order to reap the full benefit of the home appreciation.

Stability: With a fixed-rate mortgage, your mortgage payment is predictable and more stable than renting (yes, your lovely landlord can hike the rent).

More privacy: There's no landlord policing your every move.

Downsides of Owning Your Own Home

Homeownership isn't all unicorns and rainbows. Here are some of the downsides to homeownership, which may sway you towards renting:

It's a commitment: You can't just sell your house overnight or break your mortgage on a whim (at least, not without a hefty penalty). Buying a home generally means you're sticking around for at least five years or longer.

Ongoing maintenance costs: When renting, your landlord is responsible for the upkeep of your home. But homeowners have to foot the bill for regular maintenance and repairs: whether it's replacing the roof once every ten years or fixing an exploding toilet, you're on the hook.

Mortgage payments can be higher: By and large, it's usually cheaper to rent than to pay for a mortgage. However, this depends heavily on your location.

ROI can be slow: It can take time for the value of your home to increase, so patience is essential. Don't expect an immediate return on investment.

Less disposable income: Homeowners take on considerable responsibility and debt, which may prevent them from investing elsewhere (in RRSPs or TFSAs, for example). In some cases, a homeowner may find themselves "house poor" - meaning a big part of their income goes towards the costs of homeownership, leaving little left over to pay for other needs and wants.

What are the Benefits of Renting?

It may not a popular opinion, but renting a home has some perks worth considering. Here are the pros of renting a home:

Cheaper: In general, rent payments tend to be lower than mortgage payments, and may cover other costs, such as utilities, hydro, cable, and internet.

Flexibility: In the era of Airbnb, renting gifts you the ultimate flexibility. Most leases are one year, but it's possible to score an agreement that's month-to-month. You may decide to get a short-term rental through a home-lending website. If you've got wanderlust or commitment-phobia, renting may work best for you.

Little or no maintenance: You don't have to shell out a wad of cash when the dishwasher breaks or the basement floods. Call your landlord instead!

Financial freedom: As a renter, you'll likely have more free cash to sink into investments and retirement planning.

The Downsides of Renting a Home

Let's be honest: there are some unappetizing things about renting. Here's are some not-so-great aspects to being a renter:

You're not building equity: While renters avoid taking out a mortgage and footing the bills for running a house (which can be big bucks), they also lose out on building equity. Instead, your monthly rent cheque goes towards paying someone else's mortgage.

The landlord is boss: We've all heard horror stories about deadbeat landlords and surprise eviction notices. Renting means you're living on someone else's turf - and they get to call the shots (within reason though...there are laws, after all).

Instability: In accordance with local laws, the landlord can hike the rent. A spike in your rent payment could trigger you to start packing - which is not only inconvenient but for cash-strapped people, could trigger a full-blown financial crisis.

Rent vs. Buy: How to Decide

Before you make the leap from renting to owning, it's wise to dig in and analyze your current financial situation and short-to-medium-term goals. We'll deal with specific financial considerations later; but first, survey your personal situation and readiness for homeownership first.

Where do you want to live?

The first (and most important) thing to do is to compare the cost of rent to mortgage payments in your neighbourhood. The housing market will exert significant influence on your decision-making. In "hot" housing markets like Vancouver and Toronto, the cost of a mortgage may be significantly higher than the amount you would pay in rent. As a general rule, if you're paying more than $3,000 per month in rent, you can probably do better on a mortgage.

Rent vs. Buy Calculator

One way to crunch the numbers is to use our rent vs. buy calculator.

Can you pass the 40 percent rule?

The "40 percent rule" says you should be able to meet your housing costs (principal and interest, taxes, and heat), as well as your other registered debts (such as car loans and credit cards) with no more than 40 percent of your gross income. Not only is this a handy guideline for your personal planning, but it's also a measure applied by many lenders. Relatedly, you should be able to cover monthly costs such as your housing, food, and transportation (known as "fixed costs") with 50 to 60 percent of your net monthly income. Any more than that, and you're likely to struggle.

How stable is your employment situation?

Without stable employment, you'll have trouble convincing a lender to give you a mortgage, but more importantly, you may run into problems meeting your obligations. Do a realistic survey of your employment picture before making a decision.

How long do you plan to live in your home?

With all the talk of investments and equity, it can be easy to lose sight of some basic truths. As a general rule, the longer you live in a place, the better the investment. This is partly due to the fact that there are numerous costs associated with the transfer of real estate.

Are you ready for the commitment?

Homeownership is a big step. It means that you're saying "yes" to forking over a chunk of change for property taxes, home insurance, maintenance, utilities, and a mortgage. Are you really ready for it?

When to Rent

You're not ready to put down roots, and your long-term plans are influx. If you're thinking about travelling, going back to school, changing careers, hit pause on your plans for homeownership.

You can't afford the mortgage payment and ongoing expenses that come with homeownership. Renting is a more affordable option and makes fiscal sense in the short-term.

You've got a mountain of debt. Focus on paying off your student loans, credit cards, car loan, or whatever else is bogging down your bank account. When you're back in the black, you'll be ready to approach a mortgage lender to talk about homeownership.

You don't have a down payment saved up. Stick with renting, and instead, set up an automated savings plan to a high-interest TFSA account. After a few years, you'll be golden.

You want to invest what you save. Renting will likely give you more wiggle room to make regular payments to a TFSA or RRSP investing account.

You have "precarious employment." If your job is temporary or you're self-employed, a mortgage loan often gets nervous. Your best bet is to spend a couple of years renting, saving up for a downpayment, and building up a proof of your income. That generally means being able to produce 2 years of tax returns from Canada Revenue Agency.

When to Buy

You're ready to settle down. You want a place to call home and you don't anticipate moving for at least 5 years or more.

You're (financially and emotionally) ready to take on the many costs associated with homeownership. We're talking about making your mortgage payments, but also things like utilities, repairs and maintenance, property taxes, home insurance, snow removal, condo fees, and so forth.

You're financially fit. You've got enough money saved for a down payment and to cover closing costs. You're debt-free (or almost debt-free) and have a chunk of change that you can put towards ongoing maintenance and property taxes. You're prepared to put your needs ahead of your wants, temporarily shelving plans like travel and buying the latest gadgets.

You've got a steady source of income. You're not planning on making an abrupt career change that could impact your income, or taking time off to explore other pursuits like travel. If you're self-employed, you have at least 2 years of CRA Notices of Assessment to show a mortgage lender that you've got a stream of income coming in the door.

How Much Does Home Ownership Cost?

If you're convinced that homeownership is for you, the next step is taking a detailed survey of the real financial obligations of homeownership. Use these guidelines to estimate the real financial responsibilities of buying a home.

Down payment: 5 to 20 percent
This is the standard amount you'll need to apply for a mortgage. If you put down less than 20% of the purchase price, you'll have to pay "CMHC insurance" - a mandatory mortgage default insurance policy for those who purchase a home with less than a 20% down payment.

Closing costs: 1.5 to 5 percent
This includes lawyer fees, appraisal fees, home inspection fees, and property tax adjustments.

Home insurance: $50 to $100 per month
A home is an enormous investment. You'll want to protect it.

Maintenance: 1 to 2 percent of your income annually
A new hot water heater, roof repairs, blown electrical circuits - you name it! Homes need regular, expert maintenance if they are going to be safe and efficient. Regular upkeep also protects your resale value.

A note for first-time homebuyers: Incentives like the RRSP Home Buyer's Plan, the First Time Home Buyer's Tax Credit, and the Land Transfer Tax Rebate can all save you a bundle.

Is Homeownership a Good Investment?

If you have the resources to buy, homeownership is more than likely a smart investment. Every time you make a mortgage payment, you are essentially paying down the principal and taking a step towards owning a piece of property that will appreciate over time. Think of your mortgage payment as an investment or a savings strategy: if you sell your house down the road, you'll not only get back the money you've paid out but also likely turn a profit. If you stay put long enough, this can grow into a very healthy nest egg.

Of course, there are no guarantees and even buying a house comes with risks. In the past, CMHC has warned about overvaluation in certain areas of Canada's housing market, but for the most part, buying a house in Canada is a safe bet. Just make sure to buy within your budget and plan to hold onto the place for more than five years.

Verdict: Is It Better to Rent or Own a House?

When it comes to renting vs. buying a house, neither is better than the other. There's no clear-cut answer to this age-old debate, and it's going to require some soul-searching and number-crunching on your part. Your current personal and financial situation, as well as your goals and location, will largely determine what's right for you. Use our rent vs. buy calculator to see which option makes fiscal sense.

If you decide to take the plunge into homeownership, remember to shop around for the best mortgage lender and get the lowest mortgage interest rate possible. A bit of research could save you hundreds of thousands of dollars in the long run. From our research on the best mortgage interest rates in Canada, consider an online lender like motusbank or a credit union like Meridian. Looking at the rates, Meridian has some great fixed and variable rate mortgages, with their 5-year, closed fixed-rate mortgage at 2.59% and their 5-year, closed variable rate mortgage at 2.90%. Likewise, motusbank has some very competitive rates, and you can do the entire application online in under 10 minutes.

If you choose to remain a renter, use the situation to your advantage and set up an automatic saving plan to an investing account with a robo advisor or online brokerage. You may not be building equity with mortgage payments, but you can still build a "wealth empire" with your disposable income. According to the 50/20/30 budgeting rule, aim to put away 20% of your after-tax earnings towards savings and investments.

With low-interest rates and climbing market values, buying a home may well be on your radar. But with obstacles like paying down debt and the mortgage stress test, renting may also make good financial sense for many Canadians, especially since you value financial freedom. Both offer risks and benefits and working through our checklists and guidelines should help you make an informed and realistic decision.

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Rent vs. Buy Debate in the Current Canadian Housing Market

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Last Updated on Once upon a time, buying a home in Canada was simply a milestone in the life of the average Canadian. But times have changed: prices have skyrocketed, and housing markets have exploded, particularly in Vancouver and Toronto, making homeownership difficult and calling the investment potential of real estate into question.

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This video gives a couple of tips for first time buyers, what they should keep in mind when they are searching for a new home. Such things like knowing your budget, talking to your lender and knowing what you can afford. Knowing your lifestyle and how it’s going to fit where you live. Example, if you own a dog, finding a home close to a dog park. Knowing your re-saleability. Who will buy your home when your ready to sell? Know the builder and the land developer. Ensure you have a well-built home inside and out. Was it built with integrity? The more effort that was put into the home the better the home will be. All of these tips help make the buying process successful.

I picked this video because these tips give first time buyers great advice on where to start and what to look for when buying a home. Most people believe that buying a home is all about location, but I found that knowing your developer very important because if the developer cares it will show in the home that is built.

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First time home buyer tips and advice: 4 MUST KNOW tips before buying

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This video discusses the step by step details to buying a home in Toronto. From the down payments and deposits to land tax and legal fees. It gives examples on how these steps effect your choice and how to over come them.

I choose this video because it gives you the visual steps of what you need to know about buying a home. I found it interesting that in Toronto there is two taxes that you have to pay compared to Mississauga where there is only one. This was something that other videos I looked at did not discuss.

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Cost of Buying a Home | The Greater Toronto Area | Detailed 2019

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This video gives insight to why millennial's are stuck renting in Toronto and why their dream of owning that perfect home may take longer then they anticipated. It lets the viewer know the average price for renting a one bedroom and two-bedroom condo and how to make those costs cheaper. That, that dream of owning that perfect home will not be available until 2040, when the baby boomers start downsizing. It also informs viewers that the government introduced a new legislation that reiterates the agreement but secures the tenant. Some rental tips to consider: 1. Educate yourself; 2. Seek help; 3. Go online; 4. Network and 5. Get it in writing. Therefore, if you were thinking about buying now would be the time because there is a decent market at decent price but, if you do not have the financial means to do so do not move because you will not find anything cheaper then it is today.

I choose this video because even though it was short, I felt it gave beneficial insight into renting and buying for the demographic that are the ones looking. I found it very useful to know that, the idea of truly owning that dream home will not take place until 2040.

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Toronto rental tips and survival guide for millennials

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According to the Toronto Real Estate Board (TREB), this image gives a brief overview of renting and buying a home in Toronto and it's increase over a five year span.

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This video looks at how the rental market in Toronto is at an all time high and how rent increase can leave tenants without a place to live. Her rent went up more than 50% because of her location and how new her apartment was, and there was nothing she could do about it. It discusses how other individuals are having there rent increase 30% and even though they are splitting the rent, they are still struggling to make it through. This concept makes it hard for individuals such as students, single moms and new professionals harder to live in Toronto.

I choose this video because it shows the experience of an individual that has seen, first hand the disadvantages of renting. What surprised me the most was the increase of her rent. I understand that as time progresses rent will go up but, the amount that it increased was unbelievable.

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Sky-High rent shock in Toronto leaves reporter with no fixed address

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According to the Toronto Real Estate Board (TRIB), this image shows the cost of buying and renting in Mississauga in over the span of 5 years.