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Should I rent or should I buy? Renting vs. homeownership

Is it better to rent or buy your home? Home prices in cities like Toronto has many reconsidering the dream of homeownership. Despite all this, homeownership rates in Canada are among the highest in the world. Slightly over two-third of Canadians are homeowners, according to the 2011 Census from Statistics Canada.

Homeownership offers many benefits – forced savings, tax benefits and a way to earn income as a landlord – but it doesn’t make sense for everyone. Let’s look at the pros and cons of renting versus owning to find out whether homeownership makes sense for you.


  • Forced savings: Do you find it tough to save money? A home forces you to save. You’re responsible for paying the mortgage, home insurance, utilities, property taxes and repairs and maintenance.

  • Tax benefits: To encourage homeownership, the government offers tax benefits. For example, if you’re a first-time homebuyer, you can claim the home buyers’ tax credit (HBTC). If you bought a home in 2016, you would’ve pocketed an extra $750 by claiming this tax credit. Also, when you sell your home, in most cases you won’t have to pay capital gains tax.

  • A way to earn income: Are you looking to pay down your mortgage sooner? By becoming a landlord and renting out a part of your place, you can pay off your mortgage even faster.

  • A good long-term investment: A home isn’t just a place to live. It’s considered a good long-term investment. When you pay off your mortgage, you’ll own a valuable asset debt-free. If you need to borrow money for renovations, you can borrow from your home’s equity at a low interest rate.


  • Closing costs: If you aren’t planning to stay in a home for at least five years, you’re usually better off renting. The closing costs from buying and selling a home can easily wipe out any profits you would have made from selling.

  • Ongoing expenses: Besides your mortgage, you’ll have to pay utilities, property tax, home insurance, repairs and maintenance. This makes homeownership more expensive than renting in most cases. Make sure you have the extra cash flow to cover this.



  • Fewer carrying costs and responsibilities: When you’re a renter, you don’t have to worry about budgeting for extra expenses like replacing the roof or the furnace. If you’re lucky, your rent already includes utilities and cable. If your place is in need of repair, your landlord is just a phone call away.

  • Freedom: If you’re unsure whether you’re going to stay put in the same city, let alone the same country for the foreseeable future, renting can make sense. If you decide to move, in most cases, all you need to do is give your landlord 60 days written notice.


  • Your rent never goes away: Once you pay off your mortgage, your mortgage goes away. When you’re paying rent, you have to keep paying rent your entire lifetime (unless you decide to buy a home). Since renting tends to be less expensive than homeownership, you’ll have to be financially disciplined and save the extra cash flow.

  • Rent increases: When you sign up for a fixed rate mortgage, you don’t have to worry about your mortgage payments going up during the term of the mortgage. When you’re a renter, your landlord can increase your rent once a year.

  • Pets: Many landlords aren’t a fan of pets. If you have a cat or dog, you may have a tough time finding a place to rent.

There you have it, the pros and the cons of buying versus renting. By weighing each, you can decide what’s the best decision for your family.
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