Wednesday, April 24th, 2019
To buy, or not to buy… For a lot of people that is the question. You may hear that the market’s hot, the market’s cooling, prices are going up, prices are going down – who do you believe? Without a crystal ball, timing the housing market is really tough.
But unless you’re buying property as an investor, timing the market might not matter much to you anyway. A better question is whether you’re financially better off renting or buying your home.
One main reason why Canadians buy is so that they can own a valuable asset.
Even with a big mortgage, where you don’t feel like you actually “own” much of your home yourself, over time, your plan is probably to pay off the mortgage and have more ownership, or “equity” in the home.
Housing prices may fluctuate, but chances are that no matter what the market’s like, property you own is probably the most valuable asset you have.
Before you think about buying a home, it’s important to be honest with yourself. Do you see yourself staying in your new home for 10 years or longer? Is it a place where you’ll put down roots? The last thing you want is to make a long-term decision that you’ll regret.
Make sure, too, that you can afford home ownership. It’s not just the mortgage payment you have to worry about. Land transfer taxes, legal fees, title insurance, property taxes, maintenance expenses, utilities, and more can make buying expensive.
If your home expenses eat up all of your cash, you could end up house rich and cash poor. No one wants to be weighed down by large housing costs, without much money left for other needs.
If you decide that you’d rather rent than own, you might actually end up better off. The key is to set aside the money you’re saving by renting. If you put that money somewhere it can grow, like in a high-interest savings account or in a low-risk investment, then the value of your savings can increase your net worth kind of like property ownership can.
The thing to remember is that it’s important to set aside some savings, whether you’re a renter or a buyer. And if you can’t do that as a buyer, then you’ll probably want to delay purchasing a home until you can better afford it.
This article is provided for information purposes only. It isn’t meant to be relied upon as financial, tax or investment advice, makes no guarantees about future financial conditions or performance, and shouldn’t be considered a recommendation to buy or sell investments or financial products....Information contained in this article, including information related to interest rates, market conditions, tax rules, and other investment factors is subject to change without notice, and Tangerine Bank isn’t responsible to update this information. All third party sources are believed to be accurate and reliable as of the date of publication, and Tangerine Bank doesn’t guarantee its accuracy or reliability. Readers should consult their own professional advisor for specific financial, investment and/or tax advice tailored to their needs to ensure that individual circumstances are considered properly and action is taken based on the latest available information.