Is It Better to Buy or Rent a House?

Posted by Real Estate News on Wednesday, December 12th, 2018 at 8:15am

House for Sale

Everyone needs a house. Getting a dream house is one of the biggest achievements anyone can have in their life. Owning a house always brings security to your future. Due to the fast-rising property and mortgage rates, it is difficult to own a home. It is not possible for everyone to own a house hence renting a house is the only option left. According to 2018 Canadian Rental Housing Index Backgrounder, $1,279 is the average rent of Alberta province with 32% of rental houses in the country. Renting a home can be a permanent or temporary decision depending mainly on the financial situation and other circumstances. Well, both the options have some pros and cons. One has to consider a lot of things before buying a new home or rent a house. Lets us get involve in a fair comparison.

If You Seek to Buy a House

Pros

  • Sense of security- Owning a house from a house from a sale list is an investment not only for your present requirements but for the future as well. Owning a house secures you and your family’s future. When you own a home, it not only offers a permanent place to live but also provides a sense of safety and security to your family.
  • Financial investment- Due to the rising price of the property, buying a house is undoubtedly a significant investment. The investment in buying a house today will most probably give you better returns when you sell it in the future.
  • Easy down payment options- A conventional mortgage requires a minimum deposit of 20% down payment. It has the lowest carrying cost since these do not have to be insured. Many mortgage lenders are also providing mortgages for as low as 5% in Canada. These high ratio mortgages have to be insured to cover the possibility of default in payments.
  • Less likelihood of interference- The self-owned house provides the feeling of freedom, security, and ownership. Since you are the owner of the house, there is no landlord to depend on for decisions and permissions, related to the upkeep of the house.
  • Possible tax benefits- One can avail many tax exemptions through Home Loans. These exemptions may provide a significant reduction in your tax expenses.

Cons

  • More taxes and expenses- Owning a house can include many expenses. It's a fact that generally,  mortgage payments are higher than the rental amount. Apart from that, there are other expenses too such as property taxes, utility expenses, and maintenance costs.
  • Increase in paperwork- Buying a house from a house for sale listing needs a lot of paperwork compared to renting a house. Paperwork might consist of documents pertaining to property taxes, insurance, litigations, etc.
  • Need stable financial status- You will get the ownership of the house after paying off a possible long-term loan. Your cash flow should be steady over a long period of time to pay off the loan. Hence, you need to plan and manage your finances well.
  • Rules and regulations- In Northwest Calgary, home inspections are done to meet the rules and regulations of the state. It creates a restriction on the homeowner to build the house according to community guidelines and follow a specific architecture.

If You Are Renting a House

Pros

  • The landlord is responsible for fixing damages- It is the responsibility of the landlord to fix any damages or any other issues on the property. The landlord bears the major part of the cost, if not all expenses to fix the problems. Hence, there is no major strain on the renter’s finances.
  • Provide flexibility- Living in a rented house gives you the freedom to change the residence as per requirement. Renting allows the flexibility for people to relocate easily if their job demands so.
  • Less paperwork- Renting a house can include paperwork like agreements. However, you do not need to pay any property taxes, maintenance charges and so there is no requirement of any other paperwork regarding property taxes, insurance filings or maintenance receipts.
  • Temporary home- It is a better option for people who do not want to stay at a place permanently. These can include students, travelers, or people with jobs that require you to change your location every time.
  • Decrease in financial liability- The only big expenditure can be depositing a particular security deposit which will be returned to the renter once the rental period is over as per the agreement.

Cons

  • No tax exemptions- Renting a house has no tax exemptions whereas buying a house can avail some tax exemptions.
  • Strict rules- There are certain restrictions that the renter has to follow. Renovations or keeping pets are not allowed in many cases by the landlord.
  • Landlord interference-The landlord has the right to check on the house condition. There is no security and privacy in a rented house as the landlord can interfere anytime.

Cost Calculation

If you are planning to buy your first home in Northwest Calgary, you may search it from the houses for sale listings. Here is a sample calculation for you-.

If the cost of the house is $400000, you will need a down payment of 5%

  • Home insurance- $2500/ year
  • Mortgage insurance- $11,500
  • Admin fees- Lawyer fees and Home inspection will be $1300 extra
  • Property taxes: $1500/ year
  • Possible maintenance fees around $200/ month
  • Other additional expense: Moving costs, locksmith, etc.

If your rent cost rental of about $1200 to $1600 for a standard three bedroom townhouse in Northwest Calgary. Here is what you need to keep in mind.

  • Security/ damage deposit of a month depending on the furnishing of the house
  • Extra fee for car parking from $10 to $100 a month
  • Electric and gas bills- $280- $350 during winters and $100- $200 in summers
  • Utilities such as water, sewer, and waste collection- $70-$110/month
  • Internet, tv, and internet package- $120-$180/ month
  • Monthly travel transit pass- around $99

To rent or buy can be a tricky question. It all depends on the financial condition and individual circumstances. It would be wise to use a mortgage calculator to check your eligibility. Know how the loan will affect your budget. If all the numbers are in favor of a home loan, then you can opt for it. If you feel burdened with it, you can always opt for rent to lower your burden. Take your time, work out the numbers and options, compare and select the best option suitable for you. You may also check the house for sale listings for more choices. Get a professional real-estate agent to assist you in buying your new home in Northwest Calgary and negotiate a better price for you.

If you tilt towards purchasing a house, then please free to get in touch with us. We are looking forward to your queries in buying from the house for sale listings on our website.

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