If you’re currently renting a home in Edmonton, you’ve probably given some thought to whether or not you should be saving to buy your own place. While there are advantages to renting, there are also short and long-term drawbacks to consider. By being realistic and identifying all the pros and the cons, you can help make an informed decision on whether or not now’s the best time to buy your own condo.
We’ve put together a list of the pros and cons of renting versus owning that you'll need to keep in mind to make a well-thought-out decision before you jump into signing a new lease or becoming a homeowner.
The Pros of Renting
No Long-Term Commitments
Renting is often very appealing for people who either don’t want to commit to something for a long time or who feel like they aren’t ready to settle in one place yet (such as people who may have to travel or be relocated for work.) Being able to pack up your belongings and move to a new province without having to worry about listing your home for sale can certainly be a huge draw.
You Can Move In Immediately
Another perk of renting is that you can move in basically as soon as the lease is signed, without having to worry about saving for a down payment and going through the whole mortgage process. This can be especially beneficial for a first home, when you want to be set up right away, or if you’re a new Canadian and need to get established quickly.
The Cons Of Renting
More Expensive In The Long-Term
While buying your own condo is much more expensive up front, as you pay your mortgage off over time you’ll eventually start to own more and more of your own place. When you rent, on the other hand, you won’t see any return on the money you’re paying in - it all goes to your landlord.
You May Have To Move Unexpectedly
By not owning your own place, you don’t always set the timetable for when you move in or out. Your landlord owns your home, and while your lease agreement should protect you from sudden changes, if the landlord decides it’s time to sell you might find yourself having to find a new place at an inopportune time.
The Pros of Buying a New Condo
Earn Equity While Paying Your Mortgage
Does the idea of paying someone else's mortgage appeal to you? Every time you pay your rent as a tenant, you're earning equity for your landlord. You'll have nothing to show for all of those rental payments you’ve made years down the line.
When you own your own home, whenever you make a payment towards your mortgage loan, some of the payment will go towards the principal and another portion will go towards interest. This means you'll be earning equity on the home every year. You’ll build your assets while you're also showing credit bureaus that you're financially responsible.
Become A Landlord Yourself
As you build up equity, you’ll look more responsible to your bank and other lenders, which will, in turn, open up new financing options such as a Home Equity Line Of Credit, or HELOC. This is a low-interest loan that’s taken out against the equity you’ve built in your home and can be used for anything you like, such as a new car, a vacation, or even as a down payment on a second property.
Once you own a second property, you’ll have the option to rent it out to tenants and have them build equity for you! With housing markets on the rise everywhere, you might even be able to sell it for a profit in the future.
The Cons of Buying a New Condo
More Time and Expense Upfront
Buying a condo can take a little longer at first - you’ll have to save for a down payment and go through the whole mortgage process before you can move in, and if you already own a home, waiting for it to sell might take some time as well. While this pays off in the longer term, it can still be a bit stressful when you just want to get started living in your new place.
While it’s nice to be in control of your own space and have full control over the style and decor of your condo, this also means that if anything goes wrong with your place, it’s on you. This is somewhat less of an issue when you own a condo, as things like snow removal and upkeep of amenities are taken care of by the building, but if something breaks in your suite, you can’t just call your landlord to take care of it.
Buying a home isn’t for everyone, but if you're mentally and financially ready, now is a great time to look into owning a brand-new condo and start building for your future.