Trying to decide between owning and renting can be difficult and often times confusing. Here are seven immediate benefits to owning a home over renting. You’ll start to see which option will work best for you and give you the future you are looking for.
1. Build Equity
The first major benefit of home ownership is that your money is going into your pocket, not someone else’s. When you make payments on your house, your money is going towards your mortgage, increasing the equity on your home. If you ever decide to sell your home, you’ll be making back what you put into it, which beats paying rent every month.
You also don’t have to worry about losing the security deposit if certain contractual agreements aren’t met in the rental agreement. This could range from minor damage to the property to breaking the lease. Combined with appreciation in property values, your home equity can be a rewarding way to increase your overall net worth.
2. Freedom to Customize
The second benefit of owning a home is the ability to personalize your space to your liking. Depending on your rental agreement, most changes to your unit will be prohibited by your landlord and the rental contract. In some cases, you may not even be able to change the paint.
When you own your home, you can customize it as much as you want, at your own pace, without referencing a landlord or contract.
3. Alter Your Living to Suit Your Needs
Another benefit related to customization is that you can also make adjustments that can save you money. For example, if you wanted to be more energy efficient, you’ll have a lot more options once you own your own home. There are certain things you can do as a renter in this regard, such as reducing your power usage, but as a homeowner, with complete control over your property you could install solar panels or even completely change your home’s insulation. While this may require some financial commitment up front, over time the savings can add up.
4. Access to Government Tax Incentives
The fourth benefit only applies to first-time home buyers but is still relevant to what we’re talking about. Mortgage payments can be viewed as a long-term savings plan, and, if you are a first-time home buyer, there are government programs available to help you own your first home sooner.
- Home Buyers’ Plan: provides first-time homebuyers access to their RRSP savings (up to $35,000 per person) to purchase or build a home. You are also granted 15 years to repay your RRSP loan tax-free.
- First-Time Home Buyers’ (FTHB) Tax Credit: The Government of Canada introduced this tax credit to assist FTHB with the costs associated with the purchase of a home – a $5,000 non-refundable income tax credit amount on a qualifying home, as of January 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief.
5. More Stability
A new home mortgage has more financial stability than rental units. It isn’t uncommon for landlords and certain contracts to stipulate that rental prices can increase month to month, without warning. There are usually stipulations as to how much your rent can increase but it’s nonetheless true that your rental price isn’t necessarily fixed. With new homes, it’s common to get five-year fixed mortgages that ensure you have equal monthly payments for at least the first five years. This will enable you to effectively plan your financial future. You may also find that your mortgage payment is close to what you’d pay to rent, with the all the added perks of home ownership.
6. A Growing Investment
Purchasing a new home is an investment in your future. You are putting money into your own pocket and not into someone else’s. This doesn’t simply mean you are making your money back; it means you are potentially making money over time as your property appreciates in value.
This is especially true for new home builds. Their value tends to appreciate over time as more amenities are added to the community in the final stages of development. Buying a new home in the early stages of development is smart because you can enjoy maximum appreciation on your home over time.
There are also opportunities to make money from your home that are more short-term. If you have a finished basement you could consider turning it into a secondary suite for extra rental income. Instead of your rent money going towards building someone else’s equity, someone else’s rent money could be building yours.
7. A Sense of Community
Because homeowners tend to stay in their homes for far longer than renters, once you own a home you may find yourself naturally becoming more involved in the community around you and getting to know your neighbours better. When you’re renting, there’s far less incentive to become involved in your local neighbourhood because you know you’ll be moving on, so owning a home allows you to really put down some roots.
It’s clear that the benefits of owning a home far outweigh the benefits of renting. Once you’ve saved up for a down payment and decided on the type of home you want, you’d be surprised to see what you can afford. You’re closer than you think to enjoying the many benefits of living in your very own, brand-new home.
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