This debate is as old as real estate itself, and there are many ways to approach the question. Some financial advisors will treat it as simply a case of ratios – but it is more than that. Other experts will explore the question from an emotional or rational perspective. Truthfully, none of these is the wrong approach, or the right one, on its own.
Two of the biggest reasons to buy a home are these: to reduce uncertainty (after all, you never know when your landlord will decide to sell the rental property, and you’ll have to go) and to keep more of your money for yourself. While it’s true that in the early years, much of your mortgage payment is eaten up by interest payments to your financial institution, over time, more and more of what you’re paying is staying in the value you have accrued in your home. Tired of watching your monthly payments vanish into someone else’s pocket? Wishing you had more control over your living space, such as whether to have a pet, or what colour you want to paint your walls? Those are no less important reasons to put a checkmark on the home ownership side of the equation.
Renting can seem easy and convenient, and you need to save a big down payment to purchase a home (even a tiny one) in a high-end market like Toronto. It will take a long time to save up, for sure. Some will argue that if you invest the money you would have used for a down payment in the stock market, you’ll come out ahead. That might be true, but there are a lot of people who use this rationale to stay out of the housing market, but then don’t put the money into investments with the yield they used in their argument. The truth is, no one can predict the future – but a roof over your head that belongs entirely to you, is a very satisfying feeling.
I’m not disputing that there are some advantages to renting. The right landlord will fix things when they break, and be responsible for yard work. Increasingly, though, investor landlords are shifting those responsibilities to the shoulders of their tenants.
Things change. People change. Life changes. Even though prices are quite high at the moment, you might be a lot closer to home ownership than you think. For example, renting can prepare you for buying, by helping your find a neighbourhood you love. Already found one of those? You’re a step ahead of the game. Do you really want to live in a place where you may be forced to move because your landlord wants to move in? It could happen; just ask your friends or neighbours who are renters.
The question is whether you want to pay to borrow something or pay to own something. When you buy, you also buy more than a property. You buy a lifestyle. Backyards, or lock-and-leave. Pets. Great neighbours. Community. A sense of belonging. The list goes on and on. The idea of finding, financing, and purchasing a new home can seem intimidating, but it doesn’t have to be. It's more lasting. More solid. More secure.
Even if you’re not 100% ready to buy today, it’s never too early to make your plan. Every step you achieve is one step closer to having a home that is yours, and yours alone.