The question of renting vs buying is one of the most common of real estate questions. When deciding to rent or buy a home there is a lot of conflicting information and personal guidelines given to house hunters. They most important thing to keep in mind when deciding on whether to rent or buy is how it affects your financial security. Here is brief comparison of renting vs buying and what factors you should keep in mind.
A home is not only your residence but it is also an investment into your future. Home ownership is a large task but also can pay off with great reward. Unlike other areas of the country, homes in Durham region continue to grow in value and desirability. The Durham Region Association of Realtors released earlier this year that the average property has jumped 14.4% in value over the last year alone; the average Durham home would have sold for an average of 395,000 in 2014 will now sell for 452,000 in 2015. As property values in Toronto continue to reach historical highs, many house hunters have begun to seek out properties in the GTA area that sit at a more reasonable rate. Purchasing a home in the Durham region provides house hunters very little financial risk with a great amount of foreseeable reward.
When you rent a home however, the gains in property value and equity offer no benefit to you. While you pay your landlord’s mortgage, they reap the benefit of increasing property values. Landlords are also able to increase rent payments on a yearly basis; in 2015 the maximum increase to rent was 1.6%. Though this may not seem like a great deal more, property owners in Durham gained 14.4% value on the property itself as well as legally requesting more in rent.
Mortgage Payments vs Rent
Next to consider is mortgage payments compared to rent payments. With some mortgages you are locked into a long term contract with set payments. While certain types of mortgages have variable monthly payments based on the economic market, others are set for a certain time period and are very predictable. Many mortgages will also give you the benefit of loan refinancing if an unforeseeable financial emergency occurs.
Rent payments are agreed upon between landlords and tenant prior to moving in, and stay in place for at least a year at a time. Unlike mortgages however, landlords are typically less understanding of emergency circumstances as your rent payment covers the mortgage under their name.
Long Term or Short Term
Renting vs buying can also be an issue of time frame. If you’re only planning to stay in an area for a few years renting can be a more secure choice. If you move often, renting allows you to stay transient and not locked down to a home. With a rental, moving is simply a matter of waiting for the contract duration to expire or paying the remainder of what you owe.
If you plan to stay in an area long term, home ownership is a much better idea. Home ownership is an investment which can earn you money. You gain through equity, property value, tax credits, and the ability to increase the value of your home through renovations. If you decide to move later on, you can also use the home as an investment property and become a landlord to a renter.
When asking about renting vs buying there is no one answer that is universally correct as there are many variables that have to be correctly considered and judged. For more information about renting vs buying, and to start finding properties that meet your needs, contact us at Mary Roy and Team today!