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 )
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.
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!