It might be difficult to decide whether to buy a home or rent one. To make a wise choice that fits with your financial situation, way of life, and aspirations, there are several factors to take into account. The following are some items I want you to consider.
Analyze the market. According to media reports, Ontario's residential real estate market is no longer as hot as it was during the pandemic's peak. There are many causes for this, but a few stand out: growing living expenses, higher inflation, and rising interest rates.
If you are considering purchasing a property, you might be able to do so at a lower price than you were able to last year. There might even be room to haggle over the terms and circumstances.
However, how well your local market is doing will determine this.
I would like to point you that, although purchasing sounds enticing and can be a dream, interest rates are also increasing the requirements for stress tests and mortgage rates (a stress test is a high interest rate used by a lender on a mortgage application to qualify you). More information about that can be found in my column from two weeks ago.
This basically indicates that there will be a decrease in the number of people who are qualified for a mortgage and the amount they are authorized for.
Consider the effects of purchasing versus renting. Each has advantages and disadvantages. Property acquisition is a significant financial endeavour. You will be in charge of paying taxes, utilities, and repairs in addition to general maintenance as a homeowner.
However, you are free to make any changes you choose and gradually increase your equity.
Renting, on the other hand, might be less expensive. The majority, if not all, required maintenance and repairs will be handled by your landlord, who may also pay for utilities. Additionally, you can have more freedom to leave the apartment whenever you want and with a short notice requirement.
However, since you don't own the property, you probably won't be able to make any significant improvements and won't be able to build up equity over time.
Calculate the statistics and determine your top priority. Here are some issues to consider:
- How much accountability are you ready to accept?
- Do you have the funds to cover a down payment, a mortgage, and other costs associated with owning a home?
- Are you someone who can save the money you would have otherwise paid toward a mortgage if you pay a modest rent?
- Have you got a high credit score?
- Do you appreciate the ability to move around or are you trying to increase your equity?
Everybody has a unique set of circumstances. You might be able to choose what's best for you if you give these questions some thought. If you're still unsure, seek advice from a financial or real estate professional.
Regardless of whether you decide to buy or rent, make sure to read the fine print and seek the advice of a real estate lawyer before signing. This is true of any legally binding deal.
GET IN TOUCH if you have a question for Charles about the purchasing or selling of a home.