This is the big question that many of us face at one time or another. Should I buy a home or should I continue to rent? What are the benefits of buying a home? What are the consequences of buying a home? All of these are valid questions that, as a prospective home buyer, you should ask yourself and have answers for. You should feel confident when you make your final decision to purchase a home. This area will provide some answers or guidance on how to get the answers to some of these big questions.
If you are looking to invest in your future you should be buying a home rather than renting. While the concept really is that simple, a person definitely has to have the mentality of being a home owner rather than a renter. Approximately 30% of Canadians are renters. If you aren’t planning to need a place for more than a couple of years renting may be for you but most of us need housing for the rest of our lives.
While renting a home can seem like a good idea to some there are a lot of others who get rich off of people’s lack of willingness or ability to purchase a home for themselves so which one would you rather be? You don’t have to be one or another as not everyone is cut out to be a real estate investor but what we often see, when someone buys their first home early on in life, they may end up keeping that home and turning it into a revenue house and then purchasing a second property to live in. This is an investment in their future and this investment reaps the benefits of having the tenants pay the actual investment costs.
The first thing a standard first time buyer in Saskatoon or surrounding area needs is a down payment and this is where people can get hung up on never getting out of the rental lifestyle. If there is a will though there is a way and if you have good credit you may even be able to borrow the down payment.
Some people worry about becoming ‘house poor’ which scares them from buying a home. You need to ensure you are in a secure job and that you don’t max out your lending power as you should be prepared for higher interest rates. When you buy a home you should also try to have some savings in case anything does go wrong with either your home or in your personal/professional life.
Here are some other reasons why you may want to consider buying instead of renting:
- Equity – many people invest in RRSP’s as a way for saving for retirement and often these same people also invest in real estate as this tends to be one of the most secure investments. Everyone needs somewhere to live so you should build your own equity instead of throwing the money away by essentially paying 100% interest.
- Security – as you own your own home you don’t have to worry about rental increases or eviction. There is a sense of security that your home is not going to be sold and you left homeless and possibly unable to find new accommodation to fit your needs.
- Pride of ownership – have you ever rented a hotel room, car or other? Did you treat those large ticket items with the same care as something you own yourself and are responsible for? Home ownership almost always comes with pride as it is yours and most people are proud of what they own, whether it is a mobile home or a mansion.
- Sense of place – if you own your home and you know you always have a place to call home and it helps ground you to the community.
- Something to sell later in life – imagine when you retire and you want to start traveling or living a more simple life and you can cash in your real estate investment. Not only have you not paid for someone else’s house (as is often the case when renting over a lifetime) you can also sell it and have a gain of, very likely, more than your initial investment.
- Outright ownership – imagine never having to rent again? This is the goal of owning a home and investing in your future. If you pay off your home in 25-35 years and you are ready to retire you will have more disposable income as you will have less bills to pay.
Life always takes many twists and turns and there are no guarantees in any sort of investment but is it not better to pay for what you own and build equity than to pay for someone else’s mortgage by renting? Also remember, you need to start somewhere and while many home buyers want the biggest and the best for their first home you have to be realistic and understand that a ladder has many rungs to get to the top as does the ‘property ladder’. Start small and in a comfortable place and build your way up.