Deciding whether to rent or buy a home in Canada is a huge decision. There are a lot of factors and what-if scenarios to consider before moving forward one way or the other. In most cases, buying a home is the better choice in the long run. However, there are some reasons why renting would make more sense. Let’s take a look at both.
Reasons To Buy A Home
The biggest reason for Canadians to buy a home is that you build equity. Equity is the difference between how much you owe on a home and its worth. You build equity in two ways: paying down your mortgage and when home values increase. So, let’s say you owe $200,000 on your home, but you can sell it for $500,000. That means you have $300,000 of equity. When people say that paying rent is “throwing money away,” this is why. When you sell your home, equity is tax-free money in your bank account. Your monthly mortgage payment will eventually come back to you, but a rent payment won’t.
Of course, there are more fun reasons to buy a home, like being able to paint or remodel the house however you please. Most landlords won’t allow you to make changes to the home, so you might end up living in a home that isn’t “you.”
Reasons To Rent A Home
We think buying a home should be the end goal, but sometimes it’s just not possible. If you have a job that requires you to move around every couple of years, it may not be worth it to buy a home.
Credit challenges may also prevent you from buying a home. When you have bad credit, it’s tough to get a mortgage. If you are approved, you’ll be charged higher interest rates since you’re viewed as a “risky” buyer. Getting your credit score up can be done relatively quickly as long as you stay consistent. With a higher credit score, you’ll have a better chance of getting a mortgage.
Are There Any Other Options?
Are you in a position where you know you want to buy a home, but you just aren’t quite ready? Maybe you are a self-employed business owner or have just started a new business. Maybe you are going through a divorce and aren’t in the financial position to buy a home. You do have the option to rent to own a home.
Rent to own means you sign a lease with an option to purchase the home at the end of the agreement. Most rent to own contracts are for 2-4 years, which gives you time to improve your credit score and save up for the down payment.
With rent to own, you won’t have to go through the hassle of packing and moving after a couple of years. You also don’t have to worry about your landlord deciding to sell out of the blue or raising the rent since your rent payment during the lease period of a rent to own agreement is fixed.
If you’re interested in rent to own in Canada, we can help! We help future homeowners like you. Contact us to get the process started.