Category: Blogging

Today, there are more and more people buying homes than ever before. Renting is starting to become a thing of the past because now is a great time to buy a house. It probably is the best investment you could make because there is such a high demand for housing. Now the question is, should you rent or should you mortgage?

Well, this really depends on a lot of factors. You’re financial stability, your long-term goals, how long you want to stay in the home for, are you a traveler? When renting a home, you make your monthly payment and that money is gone forever. But with a Mortgage, your money is invested into the home and after the loan is paid off, the house is yours to keep, sell or pass on to your children. The general rule of thumb is the 5-year rule.

Owning a home means that you can blast your music, paint your walls, tear down and re-do the bathroom, and hang whatever you want on the walls. Mortgaging a home in Ontario is pretty much investing in your future.

Unlike many other markets, real estate is sort of the black sheep. Even though it’s constantly changing, it’s always appreciated. The trick to buying a home is to keep an eye out when the prices are at the low points and sell when they are at the high points.

Emotional satisfaction is also achieved by owning a home. The fact that you own your own home to grow with your family is one of those things that gets everyone going. The older houses get, the more memories they carry. Renting on the other hand doesn’t give you the same emotional satisfaction. You make your payment and that’s it, nothing to show.

A major benefit of buying a home is that you’re able to do renovations, decorations, or any other “actions” that you’d like. Doing these improvements actually increases your own home equity, whereas when you rent, any input you make on the home builds your landlord’s equity.

A house is a great investment not only money-wise but emotionally wise too. Remember that when you rent, the payments never stop, even 30 years down the road. Mortgage payments, although they take 15-30 years to pay off, do eventually stop, and leave you with a nice home, plenty of equity, and no more obligations.

Is It A Waste Of Money To Rent in Mississauga?

Do you ever think it’s a waste of money to pay rent? I can see your point of view.

It can be difficult to find value in anything other than home ownership when so many people are talking about the drawbacks of renting. But what if renting isn’t as horrible as it is portrayed? What if, at this stage in your life, renting is truly the best financial decision you can make? That’s precisely what we’re here to discuss. Before we go any further, I’d like to address the topic that most likely brought you here in the first place: is renting a waste of money?

No, it is not a waste of money to rent. You are, instead, paying for a place to live, which is far from wasteful. Furthermore, as a renter, you are exempt from many of the pricey expenses that come with home ownership. As a result, renting rather than buying is often the better option.

To put it another way, if you are unprepared for the financial responsibility of home ownership, renting is a prudent decision rather than a waste of money.

Now, I recognize that this is probably counter to what you’ve heard in the past. So I wouldn’t blame you if you felt like you needed a bit more information. That is why I am going to expose 5 significant reasons why renting is not a waste of money in the rest of this article.

Let’s get started!

Renting Isn’t A Waste Of Money For These 5 Reasons

When it comes to your finances, you are the one who must live with the consequences of your choices. So, regardless of what others tell you, it’s in your best interests to conduct your own research so that you may make the best decision possible.

And, while there is plenty of information available about buying a property, there is very little information available regarding the advantages of renting vs. owning. So, to help level the playing field, here are five reasons why renting isn’t a waste of money.

1. It is less expensive.

To begin, anyone who tells you that renting a property is more expensive than buying one is not telling you the whole story. Sure, when you compare the cost of a mortgage to the cost of rent, the numbers may lead you to believe that purchasing a home is the more cost-effective alternative. However, there are numerous factors that this comparison neglects to consider.

When you buy a house, for example, you will incur a lot of additional fees. Here are a few examples:

Repairs to the house that are minor

Mortgage insurance provided by a private company (if your down payment is less than 20 percent )

Landscaping

Closing expenses

Taxes on real estate

Insurance for the owner of a home

Furniture and furnishings have been replaced.

Renovations and upgrades

Some of these costs might run into the thousands, if not tens of thousands of dollars.

When renting, on the other hand, you get exactly what you see. Almost all of the costs you’ll have to pay up front are detailed in your lease. In addition to your rent, renter’s insurance, and security deposit, you’ll most likely spend your money on furniture, decorations, and minor, very inexpensive living necessities like kitchenware, towels, and a plunger.

These expenses could total a few hundred, or perhaps a couple thousand dollars. But believe me when I say that it is nothing compared to the costs of purchasing a home.

Note: If you’re looking for a low-cost renters insurance policy, we recommend Liberty Mutual. Their prices are reasonable, and you just pay for what you require. Plus, getting an estimate on your monthly fee takes less than 5 minutes with their quick and easy online quote tool.

2. Renting Allows You to Be More Flexible

Renting is a fantastic alternative if your profession forces you to move every few years. Why? Because you will most likely only be obligated to a lease for a year or two. In most circumstances, if you need to break your lease early, all you have to do is pay an early move-out penalty and you’re set to go.

In the meantime, moving is far more complicated and time-consuming when you own a property. First and foremost, you must prepare your home for sale. After that, you’ll need to employ a professional real estate agent to list it and publicize it. After that, you’ll have to deal with appraisals, inspections, negotiations, and closing. Sure, you might make a little money on the sale, but if you need flexibility in your life, renting is a fantastic option.

3. Amenities Access

The amenities that many places provide are one of the nicest, and most underestimated, features of renting. If you rent an apartment, you can have access to a gym, pool, community center, community activities, clubhouse, and other amenities. And the best part is that you won’t have to pay anything more in most circumstances. On the other hand, if you choose to buy a home, all of these costs will be in addition to your mortgage. You’ll have to pay for them at the very least through your HOA dues. And they can be quite costly!

4. Reduced Risk

I don’t think it’s a mystery that when you take out a mortgage, you’re exposing yourself to some financial risk.

Let me be clear: I’m not implying that buying a house guarantees you’ll end up in foreclosure. All I’m saying is that by taking out a mortgage, you’re taking on a significant amount of debt. Debt adds financial complexity and risk to the equation.

If the thought of accumulating hundreds of thousands of dollars in debt makes you uneasy, you should consider renting. Renting is less dangerous because it does not require you to take on debt.

Oh, and if you opt to rent rather than buy to avoid a mortgage, you are not odd. In reality, my wife and I are renting until we can afford to buy a house outright in a few years. (Though we are a touch odd, so…) It’s a different path than most people choose, but because we believe in living a debt-free lifestyle, we don’t consider renting to be a waste of money.

5. Less Anxiety

Aside from the fact that renting has a lower risk than owning, it also has a lower stress level. When you own a home, for example, you are responsible for all of the maintenance and financial obligations that come with it. So, if something breaks, whether it’s a light bulb or a furnace, you’re the one who has to fix it.

That is a significant amount of stress and duty to bear. And, if you aren’t quite ready for all of that, renting until you are might be the best option.

Consider this: if the furnace in your rented home breaks down, all you have to do is phone the landlord, who will send someone out to repair or replace it. In the worst-case scenario, you’ll have to stay at home and wait for the furnace repairman to arrive. You didn’t have to pay for it, though!

You are accountable for anything that occurs on your land as a homeowner. And that can be a lot of work.

When Is It Better To Buy Rather Than Rent?

So far, we’ve looked at a variety of reasons why renting rather than buying makes sense. However, renting isn’t always the most cost-effective alternative. So, before you dismiss home ownership entirely, let me answer the question: when is it better to own rather than rent?

Simply said, if you can put down 20% and keep the combined monthly costs of your mortgage, property taxes, upkeep, and home insurance lower than the monthly cost of renting, it may make more sense to buy a home.

That stated, the ideal situation would be to accumulate enough money to purchase a home outright, but I recognize that this is unrealistic for many individuals. To make the best financial decision possible, you should thoroughly consider all of your options, just as you would with any big purchase.

Last Thoughts

Don’t take everything you hear at face value. It’s not true that just because a bunch of mortgage companies tell you that renting is a waste of money, you should believe them. In truth, renting may be a better deal for your financial condition. Always consider working with a Mortgage Broker in Mississauga, who can run the numbers and assist you with finding the best deal.

Simply do your homework and be fully honest with yourself.

To sum it up, renting is not a long-term arrangement. So, if you’re thinking about purchasing a house but are still undecided, don’t be scared to rent for a while longer. It’s better to take your time and make an informed decision than to ignore your instincts and hurry into a property purchase before you’re ready.

So, what are your thoughts on the subject? Do you believe it is a waste of money to rent? Please leave a remark below!

The reasons why you should refinance are endless; however, it’s all about timing and research. Getting these two aspects right the first time can save you money for a family vacation, renovations, a new car, a new speedboat… you get the point. Some might want to refinance to lower their monthly payments, others to consolidate outstanding debt, and others just to find a better mortgage product to suit their needs. It also makes sense to speak to a mortgage broker in Ontario, who can run the numbers for you to determine savings.

Think of it this way; are you the same person you were 5, 10 maybe 15 years ago? If you’re like anyone else, probably not. You may have found a new job or need a change in your mortgage product, from an ARM to a fixed-rate mortgage for example.

There are certain rules to follow so that you don’t end up defaulting or wasting money. The traditional refinancing rule of thumb – wait until you find an interest rate at least 2% lower than what your rate is now. Although it’s usually true it can be inaccurate because in the time you wait for the rates to drop 2%, you could have already spent several thousand dollars on your current mortgage. For some people, as little as 0.5% of a decrease in rates can be enough. The best thing to do here is to really do your research and understand the market as well as possible so that you know when refinancing is best for you.

Another factor when refinancing is your future plans with the home. Generally, some plans such as a balloon mortgage will require a refinance when the period is over. But if refinancing is not mandatory, you could have to wait as long as you stay in the home to refinance. The key thing is to be truthful no matter how much you love your home. Figure out how long you think you will be living at the home. Timing is crucial so understanding when to refinance and when you will start saving money only comes with research. The fact is that refinancing can cost a great amount of money, so you’ll want to be as certain as possible of your situation with for example, if your employer will relocate you to another city, or that you’ll change jobs soon. Do you have a physical condition that would force you to move? Evaluating your situation now and in the future is very important so try not to cut corners on this step.

The next step is to figure out if you need more or less of a mortgage. Most lenders will let you borrow about 80% or more of your home’s appraised value; however, if you’re looking for a ‘cash-out refinance’ it could be lower than 80%.

Now that you know why you may want to refinance, how long you’ll be staying at your home, and how much of a loan you need, we can look at possibly the most difficult part of a mortgage – the closing costs. The closing costs are what you pay out of your pocket to refinance your mortgage. While some closing costs are preset, others are dependent on your local market. Figuring out your closing costs can take some time and effort because they can cost up to $5,000 and will determine how much you save when refinancing.

It makes sense to refinance a home when it will save you money or make paying your monthly bills easier.

According to some experts, you should only refinance if you can reduce your interest rate, shorten the term of your loan, or do both. This advice is not always sound. Certain homeowners may require temporary relief from a lower monthly payment, even if it means refinancing to a 30-year loan. Additionally, refinancing can help you access the equity in your home or eliminate the monthly mortgage insurance premiums associated with an FHA loan.

How Mortgage Refinancing Works

When you refinance, you obtain a new mortgage in order to repay your existing one. Refinancing works similarly to obtaining a mortgage to purchase a home. However, you will be relieved of the stress associated with home buying and moving, and there will be less pressure to close by a certain date. Additionally, if you change your mind, you have until midnight on the third business day following the close of your loan to cancel the transaction.

According to one reputable report, the average time to refinance a conventional mortgage ranged between 38 and 48 days from April 2019 to August 2020. When interest rates fall and a large number of homeowners seek to refinance, lenders become busy and the refinancing process can take longer. Additionally, refinancing an FHA or VA loan can take up to a week longer than refinancing a conventional loan.

When Home Loan Refinancing Makes Sense – Speak to a Mortgage Broker

Refinancing your mortgage can lower your monthly payment by lowering your interest rate or lengthening the term of your loan. Additionally, refinancing can lower your long-term interest costs through a lower mortgage rate, a shorter loan term, or a combination of the two. Additionally, it may assist you in eliminating mortgage insurance.

Closing costs, which include the origination fee, appraisal fee, title insurance fee, and credit report fee, are always a factor in determining whether to refinance. These fees typically range from 2% to 6% of the amount borrowed.

You’ll need to know the loan’s closing costs in order to calculate the break-even point at which the interest rate savings exceed the closing costs. This point can be calculated by dividing your closing costs by the monthly savings associated with your new payment. A mortgage broker would also be able to help you figure out these numbers in a expedited manner.

Obtaining a Reduced Interest Rate

When market interest rates fall, refinancing to obtain a lower rate can result in a lower monthly payment, a lower total interest payment, or a combination of the two.

Another way to reduce your monthly payment is to pay interest on a smaller principal amount, possibly over a longer period of time.

According to government data for the first quarter of 2020, which primarily includes pre-pandemic refinance activity, 55% of borrowers who refinanced maintained their current principal balance or increased it by less than 5% (by financing their closing costs). This is the most frequently used method of refinancing: a rate-and-term refinance.

A higher credit score will enable you to obtain a lower mortgage interest rate. To qualify for the best rates, you must have a credit score of at least 760. According to a government mortgage processor, nearly three in four homeowners who refinanced in April 2020 had a credit score of 750 or higher. Seven hundred and sixty-three percent of consumers had a FICO score of 763 or higher.

Additionally, bringing cash to closing may result in a slightly lower interest rate or the elimination of private mortgage insurance (PMI). 3% of borrowers did so in the first quarter of 2020.

As you may remember from getting your first mortgage, several other services are trying to charge you – appraising your property, researching your title to the property, insurance, credit reports, and inspections for varmints, safety, and structural factors. These services can easily add up to a few thousand dollars and they will save you money in the long run but there are ways in cutting these costs. For example, you can update your title insurance instead of getting a completely new one. Shopping around and comparing as much as possible can also save you money from these fees.

Remember, a mortgage is like buying a vehicle. You wouldn’t run to any car dealership and buy the first car you see, would you? The same goes for a refinance as well, do your research, talk to a lot of different lenders, compare rates, and look into the future of your home.

Mortgage Brokers in Ontario Can Assist

When it comes to Real Estate in Canada, Ontario is among the top provinces for selling and buying. Even though Ontario’s home costs are the third most expensive in the country, the average income of an Albertan is enough to pay for the mortgage in full; about $2,000 per two weeks.

Ontario is the ninth most expensive real estate market in Canada. However, Ontario also offers its citizens higher incomes, plenty of career opportunities, great school systems, and many more luxuries. You and your personal circumstances depict whether the two sides of Ontario’s market balance out to your advantage. A mortgage broker is pretty handy to figure out if Ontario is the right place for you to buy a home.

As Canada faces a drop in the affordability of houses, Alberta’s housing costs remains commendable. Even though the rates rose between 0.5% and 1.3%, Alberta is one of the most affordable provinces in the country. The average Albertan family spends 36% of their gross income to pay the cost of mortgage payments, property taxes, and utilities for a standard two storey house, and only 21% to be spent on a condominium. The CREA predicts a higher resale activity in Alberta as sales grew by 7.3% in 2011 and is presumed to reach another 6.8% in 2012. This is a hefty raise in re-sales, estimated at about 53, 000 new home owners per year.

Royal LePage, a real estate brokerage, says the expected increase in interest rates in 2022 “may not be sufficient to offset the significant upward price pressure” on homes, particularly in the Greater Toronto Area, where the average property price is expected to increase by double digits once again. In speaking with a mortgage broker Mississauga, we were also able to determine that the stress test being used by most banks may make it a challenge to qualify – but do call to discuss your personal circumstances.

According to the brokerage, the average price of a property in the Greater Toronto Area grew 17.3 percent to $1,119,800 in 2021 as demand continued to outstrip supply.

It forecasts another 11% increase in prices in the GTA in 2022, with the overall home price hitting $1,243,000 by the fourth quarter.

Price increase is projected despite market predictions that the Bank of Canada will hike interest rates up to five times in 2022, greatly boosting the cost of borrowing.

“This is unsustainable. The good news, if you can call it that, is that we expect all prices to rise at roughly half the rate they did in 2021 in the months ahead, which means that while home prices will continue to rise, the rate at which they do will slow,” Royal LePage President and CEO Phil Soper told CP24 on Friday morning. “We will see things revert to normal appreciation levels in the future; my opinion is that by 2023, we will be back to single-digit growth, as we have grown accustomed to in the city and across the country over the decades.”

Since early in the COVID-19 pandemic, the Bank of Canada’s overnight lending rate has remained at its effective lower bound of 0.25, but with inflation skyrocketing and employment numbers returning to pre-pandemic levels, the central bank is projected to commence a cycle of rate hikes in the coming months.

Soper stated that if this occurs, it will effectively increase the price of homes and “some people will be priced out of the market.”

However, he stated that it is unlikely to be enough to rein in soaring house prices due to a lack of supply.

“Unfortunately, we’ve been building up to this shortage of supply for years, and it came to a head during the pandemic, when there was such a focus on our homes,” he explained. “People were economizing. They were not traveling, they were not dining out, and they put a large portion of their income into improving their living conditions.”

According to Royal LePage, the median price of a detached home in the Greater Toronto Area will grow by 22.4% to $1,421,200 in 2021, while the median price of a condominium will increase by 14.8% to $665,400.

However, Soper stated that condo price growth may outperform detached home growth in 2022 due to the “increasing difference” in pricing, at least in the Greater Toronto Area.

According to figures from September 1, 2011 by the Ontario Real Estate Board, the sales are on the rise for Ontario’s higher-end homes. From the beginning of 2011 up to the end of August, 948 single family homes costing $700,000 and up were sold. This beats last year’s 779 homes sold. Sales for condos ranging from $200,000 and under also received a steady hike. 843 condos, $200,000 or below were sold in 2011 compared to 596 in 2010.

“We are seeing a lift in sales at both ends of the market.” Sano Stante, past president of the Ontario Real Estate Board states: “Improving economic conditions coupled with affordability and price stability has given Ontario a boost in buyers for upper-end homes and entry level condos.”

Before jumping into the Ontario real estate market, consider how long you are going to reside in Ontario. Since Ontario is growing at such a speedy rate, it’s almost impossible to tell where the real estate market will be in five, ten, twenty-five years from now. If you live in Ontario long enough, then your property is likely to be worth a lot more to you. Taking advantage of the Ontario real estate market takes time, so plan ahead and determine whether or not this is a long-term or short-term investment. Consider a mortgage broker to assist you in finding the right mortgage in these low interest times.