Should I buy or rent a home?
Which is the better decision for my current situation?
This is an obvious dilemma that thousands face when they entertain the dream of owning a home. There is no definite answer to this question because both buying and renting have their own pros and cons.
Let us take a quick look at the pros and cons. You should weigh all the possibilities before making any decision that will affect you in the long and short-term.
Pros of Buying a Home:
- Owning a home triggers the growth of your personal wealth and provides you long-term security and equity.
- Housing demands will always surface in the real estate market, so you can sell your home any time in the future to earn a good profit.
- Owning a home gives you greater freedom. You can use the home, renovate it or change its appearance without being restricted by a landlord.
- You can derive a continuous earning from your purchased property by renting it out to tenants. You may also use this income to pay your home loans and other large, critical expenses.
- You will get the opportunity to save some extra cash at the end of the year by claiming a tax deduction on your home loans.
Cons of Buying a Home:
- A landlord cannot deny their newfound financial liabilities like bond repayments and housing maintenance costs.
- A landlord is obliged to pay his mortgage interest rates, insurance premiums and taxes on a monthly or yearly basis.
- Sometimes a landlord may not benefit from selling their home. This risk occurs especially at the time of an economic recession or simply through a particular location becoming undesirable.
- A landlord is immobile and inflexible in terms of moving in or out of their property. They will need to buy a second home before abandoning the first one or find a suitable tenant before moving out to another location.
Pros of Renting a Home:
- Tenants have no long-term commitment towards a property that they live in. This results in far fewer headaches.
- A tenant can move in or out much easier than if they were homeowners. In the case of job relocation, this mobility allows the tenant more freedom and flexibility.
- Being a tenant comes with fewer expenses, which means that renters could have more cash in hand than a homeowner. This cash can then be used for making long-term investments in the stock market or real estate.
Cons of Renting a Home:
- A renting tenant must abide by the rules of the lease agreement. Typically, this means that they cannot change or renovate the property without permission from their landlord.
- House rents may increase any time, since tenants have no control over annual rental fluctuations. These rental increases are directly driven by economic inflation.
- There is no assurance of a lease renewal upon its expiration. This widely depends on the will of the landlord.
- A tenant has no claim on a rented property, so they will never derive any wealth creation or ROI from it. Instead they will be helping their landlord to pay for their own mortgage interests.
- Rental issues may take a longer time to be resolved if a rental agent is working as the collaborator between the tenant and the landlord.
If you’re ready to purchase and need help getting a mortgage visit https://askross.ca/second-mortgages-toronto-and-gta/