You may have heard the advice that rent is “dead money” and that you’re throwing your money down the drain if you’re not making a mortgage investment.
But due to how houses have experienced a drop in affordability in the past few decades, buying one isn’t an easy option.
Also, a certain level of what people call “dead money” is even associated with having a mortgage.
So, the debate on whether to rent or buy is very complex from a financial perspective. And it can get a bit confusing which one to choose.
Are you trying to decide which decision is right for you? Read on for a side-by-side comparison of their pros and cons to help you know whether renting or buying is best suited to you.
Flexibility vs. Stability
With mortgages, you receive financial penalties for breaking it by moving and you have to pay taxes to sell your property. But with renting, you can move after your initial lease is over, which is typically after 12 months.
This benefits you if you’re thinking of moving any time soon or want to have the flexibility to move at any point in your life rather than committing to one place.
On the other hand, when you own a home, you can always have peace of mind that you’ll never get suddenly evicted. Also, you’re in charge of making all the decisions about your home – not your landlord. Want to renovate it or add the ensuite you’ve always wanted? Go ahead.
Buying a Cheaper Apartment vs. Retaining Capital Gains
Monthly mortgage payments can be higher than the cost of rent – at least in the beginning.
By and large, it’s usually cheaper to rent. But this heavily depends on where you choose to live.
Another thing to consider is that when you rent, you don’t retain capital gains. But if you own a home, you’ll pocket the additional equity if the value of your home increases.
And if you choose to sell it in the future, you’d realize the capital gains.
Access to Alternative Investments vs. A Simple Investment
Renting your home doesn’t mean you can’t make investments to benefit you in the future. Since you’ll likely save money by renting, you can invest what you’ll save into stocks, a GIC, or starting your own business.
On the other side of the coin, owning a home is a simple investment into your future, which is one of the things that makes it so attractive to some people. Once you’ve paid it off, it’ll be a guaranteed asset. And you don’t have to spend time worrying about the uncertainty of stocks or bonds.
Having More Disposable Income vs. Building Up Equity
Homeowners take on a considerable amount of debt, which may hinder them from investing elsewhere, such as RRSPs or TFSAs. In some cases, homeowners may even find that they have to spend most of their income on the costs of homeownership.
But with renting, you can have more financial freedom. So, you can save up for retirement and have more money left over for other needs and wants.
On the other hand, every monthly payment you give towards your mortgage helps you build equity on your home. And the amount of interest you have to pay will decrease over the years.
Less Maintenance vs. More Privacy Without a Landlord
The benefit of renting a property from a landlord is that you’re free from all the hassle of its daily maintenance and upkeep.
Although you still have to pay for repairs, your landlord is the one responsible for maintaining your home. This saves you more time and not to mention, extra costs.
But the downside to this is that while you’re living on their property, they’re in charge. And you wouldn’t want to deal with a landlord policing your actions or a surprise eviction notice.
DelSuites Has the Perfect Rental You’re Looking For
Are you considering choosing a rental but don’t know where to start looking? Or are you waiting to close a deal on a new house and need to vacate your current property before the closing date?
Whatever your need is, we have the right rental for you. We have apartments and condos, as well as short-term rentals and leases. We also have furnished and serviced options.
And with all our locations in Mississauga, North York, Scarborough, and many more cities, you can choose the location that’s best for you.
Ready to get started? Browse through our numerous options to find the rental that’s best suited to you today.