Should You Buy or Rent a Home

The cost of renting a home is usually less than it would cost to buy one. In today’s economy interest rates are at historical lows and first-time buyer’s mortgage payments are less than renting, in most cases. However, there are other factors to consider when renting. Renters don’t pay property taxes, maintenance fees, repairs and other costs that come with home ownership. The down payment and savings on additional costs related to home ownership could be invested in other assets or investments with greater returns. One thing to ask yourself is if your wealth would accumulate faster in real estate or in some other investment. Renting also provides flexibility to relocate in a moments notice. People with careers that require travel or possibly relocation may find that renting is the best alternative under the circumstances. A portion of your rental costs can be deductible for tax purposes if you use part of your rental home as an office for a business or even self-employment. Lower-income families who rent their home in the province of Ontario may also qualify for a tax credit when filing their tax return. When looking to rent a home check out www.rentcharlie.com – and find a home to rent anywhere in North America.

 Now, let’s look at some of the advantages and disadvantages of home ownership. If you own your home the appreciative value of a home is not taxable if it is your principal residence. At the beginning of your mortgage little principal is paid on amount owing, However, in the latter years of your mortgage the equity in your home will grow at a much greater rate.  If you are a first time home buyer you may borrow from your RRSPs to a maximum of $25,000 each (up from $20,000 in previous years). The borrowed amounts can be taken out tax-free if you purchasing the home as your principal residence, and repayments to your plan are made over a minimum of 15-years.With rising housing costs financial institutions and private lenders have become more creative with mortgage amortizations and down payment requirements. This has allowed qualified purchasers to buy a home with as little as nothing down.

People looking for a mortgage should always be cautious when banks are lining up to give you money, as it is today. Marketing hooks like “no money down” popular with car dealerships and big banks are often misleading. Check for extra fees associated with “nothing down.” “No money down” does not mean “no fees.” Carefully check the true total amount you are borrowing, it may not be the “amazing deal” they lead you to believe. Your name may be on the title, but how much of the house is really yours? Current interest rates are at historical lows. You can choose either fixed or variable interest rates (based on the prime rate). Calculate your mortgage payments if interest rates were to rise by one or two percentage points. Ask yourself if you can still afford your mortgage if and when these rates rise. A homeowner’s carrying costs are generally greater than renting. Some of the carrying cost may be tax deductible, providing it is used as a home office for a business, self-employment or to earn rental income. Lower-income earners, in Ontario, may be able to claim the Ontario tax credit for property taxes when filing their annual tax return. With more than 70 per cent of Canadians owning their own home – there is no value that can be placed on the pride of home ownership.

So, at the end of the day it’s a choice based on lifestyle, careers, and future goals. There are obviously advantages and disadvantages to home ownership or renting a home. The choice is your just make sure you make the right choice for you and your family.