Renting Vs. Buying: Which Option Is Right For Me?

For some individuals, their financial situation or current life circumstances may leave them undecided between renting or buying a home. While there may be several reasons for wanting to continue renting, there are just as many factors that may prompt someone to consider settling down and investing in a property. The question is, how do you determine which option is best for you?

One of the first things to consider is how long you plan on staying in the area, whether it's the city or the country. If you're on a short-term job contract or only visiting for a few months of the year, renting may be the better option as it requires less commitment and can even come furnished. However, if you're already considering buying an investment property, you could purchase a home and then rent it out with the help of a property management company.

Income Stability:

When deciding whether to rent or buy a home, it's crucial to examine the stability of your income. Can you afford to make regular mortgage payments? What kind of interest rate can you secure with your pre-approval? Do you have the means to afford a downpayment? Considering these factors is essential to ensure that you can comfortably manage the financial responsibility of homeownership. If you're able to afford it, purchasing a home is a wise choice, as renting means you're essentially paying off someone else's mortgage. In reality, landlords typically charge more in rent each month than what you would pay towards a mortgage, enabling them to profit from their investment property. By buying a home, you'll be investing in yourself and putting money back into your own pocket, potentially paying out less money each month.

The Breakdown:

If you're currently on the hunt for an apartment in Ottawa, you may be surprised to learn that the average price for a one-bedroom unit is approximately $1800 per month. Over the course of a two-year lease, that amounts to a staggering $43,200 investment! However, if it's within your budget, you may want to consider using that money to make a downpayment on a condo instead. With $43,200 as a 10% downpayment, you could potentially purchase a $432,000 condo.

As a first-time homebuyer, you may even be able to get away with a 5% downpayment, which would only require $21,600. Although buying a home can seem like a daunting prospect, it's important to keep in mind that it is a sound investment. Historically, housing prices have risen over time, meaning that if you own a home for 4-7 years, you may be able to sell it and upgrade to a larger property using the equity you've built up in your current home.

Purchasing a home not only provides you with a place to live but also builds wealth over time. Additionally, homeownership offers numerous benefits, including stability, privacy, and the freedom to make changes to your property as you see fit. Although renting may seem like the easier option, it's worth considering the long-term financial benefits of buying a home.