Renting vs. buying a home
June 2022 – 15 min read
Renting your home can be less expensive due to fewer expenses and offer more flexibility to move
Owning your home can provide a forced way to save, growing equity, and pride of ownership
Advantages of renting your home
Costs less than buying a home
While renting in many places is still not cheap, it’s usually less expensive than owning a home. Plus, you won’t be on the hook for maintenance expenses, repairing appliances, unexpected costs or property tax. You also won’t have to pay land transfer tax when you purchase a home, commissions when you sell a home or legal costs to buy or sell.
This means you may have more money left over for investing or other purchases like a vacation or vehicle.
Many leases are for a year or less, while there are financial penalties when you break a mortgage and taxes to pay whenever you sell a property. This means that as a renter you’ll have more freedom to move somewhere else.
Advantages of owning your home
Forced savings, building equity
For many people, buying a home is the biggest investment they’ll ever make. Real estate is often a good investment because over time property values generally appreciate.
For this reason, people often consider paying for their home as a forced savings program.
In addition, once you’ve paid down a portion of your mortgage, that equity can be used as collateral for a business loan, to purchase more real estate or renovate your home. The equity in your home can even be used to help fund your retirement, whether you continue to live there, or sell it and downsize to another home.
Freedom and pride of ownership
When you own your home, you can paint the walls the colour you want, buy the appliances that make you happy, etc. In addition, many homeowners feel more stable and are proud of their property.
Buying vs owning in some Canadian cities
Median monthly rent as of May 20221
|Median house price as of May 20222|
|Toronto||$1,590 for a studio to $4,000 for a 4-bedroom||$1,354,000|
|Vancouver||$1,945 for a studio to $5,995 for a 4-bedroom||$1,374,500|
|Calgary||$1,025 for a studio to $1,859 for a 4-bedroom||$511,600|
|Montreal||$1,095 for a studio to $2,560 for a 4-bedroom||$573,100|
|Halifax||$1,408 for a studio to $2,995 for a 4-bedroom||$528,100|
Now that you understand more about the advantages of renting vs. buying your home, you may want to contact your advisor to:
Confirm the size of mortgage you can afford
Plan to save for your down payment
Determine whether renting or buying best meets your financial situation
The information provided is based on current laws, regulations and other rules applicable to Canadian residents. It is accurate to the best of our knowledge as of the date of publication. Rules and their interpretation may change, affecting the accuracy of the information. The information provided is general in nature, and should not be relied upon as a substitute for advice in any specific situation. For specific situations, advice should be obtained from the appropriate legal, accounting, tax or other professional advisors.