The pressure of owning your own home is A LOT.
Watching the interest rates rise is discouraging to buyers.
Society has taught our successive stages of life should look something like:
1. graduate high school
2. graduate college
3. get a great-paying job
4. get married
5. buy a house
6. have 2.1 kids
7. retire wealthy at 65
We know this is not everyone's dream nor does it happen in this order.
If you're on the cusp of deciding to buy or continue renting, this may help.
Let's use an example of a 3 bedroom + 2 bathroom house for rent in Edmonton.
On average, you'd pay $2200/month for rent, $500/month for utilities, and $40-$80 per month for tenant insurance.
That's $2800 per month.
$26,400/year for rent. In 10 years, you'll have paid $264,000 of your landlords' mortgage.
For the same expense, you could buy a house for $320,000 at the current interest rate of 5.24% for a 5 year closed term, with a 25 year mortgage:
$1882/month mortgage + $290/month property tax + $125 house insurance + utilities $500 = $2797
Sell in 30 years, home will be paid and have appreciated in value. Pocket that money for retirement!
Buying sounds like a no-brainer! Right?
But, we didn't talk about what you need to qualify for a mortgage.
You need at least a 5% down payment, good income, little-to-no debt, and decent credit.
Once you've bought, you're looking at maintenance expenses over the time you own it.
You're responsible for everything. You may need to replace things like shingles, hot water tank, furnace, etc. Maintain Landscaping and buy new appliances if yours fail.
Some don’t want the responsibility and prefer to invest in other ways.
The advantages of renting are:
- Maintenance cost is not your responsibility
- You have the flexibility to live where you want to live
- You don't have to come up with a downpayment
It's not a great idea to buy if you're planning on selling within a year or two. Unless you're planning to hold the property and rent it out.
The market can change at a drop of a dime. Buying property is meant for a long-term hold.
If you'd like to buy, but you're not in a position to buy right now, I can help map out a plan so you'll be ready to buy when the time comes.
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