Buy Or Rent?
If you’ve ever rented a dismal apartment, followed Toronto real estate, or felt like you’ve spent too much time in your parents’ basement, chances are you’ve asked yourself the question: Should I rent a home or buy a home?
This is a decision most people face, and it’s not one to be taken lightly. The good news is that while there’s no right answer, it’s a decision you don’t have to make alone. At GTA-Homes, we’ve helped countless people evaluate their options and come to a solution that’s right for them.
If you own a condo, you can reasonably expect the equity in your Toronto condominium to increase over time, which can be a rewarding way to increase your net worth. In contrast, people renting for that same period of time will be left with no property investment, but may have enjoyed lower living expenses and the opportunity to invest in other opportunities.
Let us break down some of the advantages and disadvantages of both setups for you.
This is a low-risk option for the commitment-shy, with generally less maintenance hassles. Some of the advantages of renting include:
Enjoying a single, stable monthly payment. Generally, as a renter you can count on a predictable monthly rent, that may or may not include utilities. Owning a condo involves other monthly carrying costs besides your mortgage payment, like property taxes, condo fees, utilities and insurance.
You’re not on the hook for maintenance tasks and expenses associated with them. Fridge broken? Toilet leaking? If you’re a tenant, all of that responsibility belongs to your landlord. Granted, some landlords are more fun to work with than others when it comes to maintenance requests, but ultimately, it’s their project to take care of, not yours.
Freedom to move. If it turns out your new neighbourhood has too much traffic for your liking, provides too long of a commute to work, or you wish you could walk to more of the city’s hotspots, you’re free to move every year, if you really want to. If you can’t decide on an area you want to live in long-term, you might be better off biding your time in the rental market. Additionally, the moving process is significantly cheaper and less complicated for a renter. Buyers, on the other hand, are on the hook for land transfer tax upon purchasing and commissions when selling, not to mention the selling process itself, which is a significant undertaking.
Sometimes it’s cheaper to rent. Looking strictly at your monthly payments, your overall costs may be cheaper when renting. This is particularly true if you don’t have a significant down payment. If you’re able to be a savvy budgeter while renting, it may make a good option while you’re busy saving up for a down payment, giving you more freedom when it comes to where and what you decide to purchase in the future.
Ready To See How You Can Make Your Real Investments Dream A Reality? Register Here For Projects That Meet Your Needs
Besides the pride of homeownership, which you can’t really express in monetary values, there are a number of concrete reasons why purchasing a condominium may give you an advantage over renting. Some of these advantages include:
Every payment goes toward your own mortgage, not someone else’s. Instead of helping your landlord pay their own loans and never reaping any rewards from your hard-earned income, your mortgage payments are going toward equity, which is a huge bonus for you in the end. Additionally, when property prices increase, you stand to gain, not your landlord.
You have the freedom and luxury of owning your own space. Have as many friends over as you want, swap out your appliances, renovate your bathroom or paint your walls in dramatic colours. You may still have to abide by certain condo committee rules, but overall, it’s your home and you call the shots.
It’s a solid investment plan. Real estate investment is a popular option, largely because GTA real estate has long yielded better and more predictable results than many investing alternatives. With that being said, any reward comes with risk, but paying off a mortgage is kind of like being forced to have a savings plan. If you’re saving money by renting, yet blowing those savings on too much takeout, buying might be a better financial plan in the long term.
Sometimes it actually is cheaper to buy! You’ve probably noticed that navigating the GTA’s rental market isn’t always a straightforward process, nor is it cheap, especially if you’re looking to rent in neighbourhoods like Yorkville or downtown Toronto. If you’ve managed to save up a significant down payment, this is especially true. Check out our mortgage calculator for more information.
There are advantages to both kind of situations and the decision to rent or buy depends on many variables, including your income, savings, monthly costs and your personal values. You might want to consider continuing to rent if:
You don’t have a down payment. A down payment is usually between 10 and 20 percent of the total purchase and is a critical part of the equation when calculating how much you can afford when it comes to condo shopping.
You aren’t sure where you’ll be in the near future. The longer you live in your condo, the more money you’ll make on it. If there’s a chance you might accept a job in another part of the country or spend a few years travelling abroad, it might make more sense to stay in the rental market.
You prefer a setup with less risk. No reward comes without risk, but it’s never possible to guarantee that real estate prices will go up. If you would rather have one, low-maintenance predictable monthly cost and not worry about property prices affecting your investment (although naturally property prices can affect rental rates too), renting is probably the way to go.
You can’t afford a place or neighbourhood you want to live in. If you have your heart set on a condominium in Yorkville or you absolutely want a three-bedroom loft space, it makes sense to bide your time and save up for a significant down payment rather than rushing into the purchase market and settling for a unit you don’t love.
On the other hand, you might consider buying if:
You want your income to go towards paying your own mortgage, not someone else’s. Many of our buyers have told us Investing in themselves was the best financial strategy they’ve ever made.
Your finances will allow you to afford a condo in a desirable location and you’ll still have enough money left over to live comfortably. It’s true that sometimes owning a home means making sacrifices, but you should never feel like you’re stretched beyond your limits. Use our mortgage calculator to see what kind of monthly payments you’ll be looking at if you decide to buy.
To you, increasing your assets with an investment is just a bonus. If you believe the real value of owning a home or condo lies in laying down roots and living your best life, you’ll likely find meaning in the decision to purchase.
At GTA-Homes, we’ve helped hundreds of people evaluate their options and guided many first-time buyers through the process of purchasing their first pre-construction home or condominium. Find out how we can help you. Give us a call or drop us a line!
We Specialize In Finding Projects That Meet Your Investment Needs. Register Here For All Upcoming Developments
Learn More About The GTA Real Estate Market
Whether you're moving across the city, across the country or around the world, we have the expertise, knowledge and the resources to make your next move exciting and successful.
Awards & Achievements
At RE/MAX, success is celebrated through an established award and recognition program, and we are honoured to continuously have our mission of providing industry-leading customer service and local expertise recognized.