Not sure if you should rent or buy a home? Ultimately, the answer depends on your own personal situation—your finances, lifestyle, and personal goals. While there’s no definitive answer as to whether renting or owning a home is better, below are some reasons why renting might be a better choice for you.
- No Maintenance Fees
One of the many benefits of renting is that there are no maintenance or repair costs. The landlord owns the space, and therefore has full responsibility full any maintenance, repairs, or improvements. If something breaks, like your dishwasher or dryer, the landlord is required to fix or replace it.
Homeowners, however, have to pay for any fees for their home, which can get costly.
- No Down Payment
When you rent a place to live, there is no down-payment needed. While you will most likely need to pay first and last month’s rent as a security deposit, this amount is not anywhere near the same amount as you would make for a down-payment on a house. In addition, these deposits go toward paying your rent, so you’re essentially not paying anything extra, you’re just paying your landlord in advance.
When you purchase a home, you’re required to make a down-payment. The minimum down-payment percentage depends on the purchase price of the home. In Canada, if the home is $500,000 or less, you need a minimum down payment of 5%. If the home is more than $500,000, you need a minimum down payment of 5% on the first $500,000, and 10% for the portion of the purchase price above $500,000.
If you pay a 5% down-payment on a $500,000 home, you’re paying $25,000 upfront. The average rental apartment in Toronto (which happens to be one of the most expensive cities in Canada to rent), is $2,250 for a 1-bedroom, according to Zumper. Those who don’t have money for a down-payment are better off renting a place.
- No Yard Work
In most cases, people who rent are living in an apartment or condo that doesn’t have a backyard. Some people rent houses that have a front or backyard (or both). Since they do not own the house, they do not have to pay for, or do any yard maintenance. This includes things like cutting grass, pulling weeds, shoveling snow, and more. The landlord will be responsible for completing this yard work themselves, or hiring someone to do it. This means that you don’t need to do any labor when it comes to yardwork!
Of course, renting a place means you don’t need to have a mortgage. For many people, being a homeowner means needing to have a mortgage. You have to make a big commitment to pay back a large amount of money within a certain period of time. There are many costs associated with this, including closing costs, agent fees, interest payments, property taxes, and more.
If having a mortgage is too large of a commitment for you, renting would be a much better option.
- You’re Not Tied To It Long-Term
Being a renter means that you’re able to move pretty much when you want. All you need to do is give notice to your landlord (in Canada it’s 60 days notice). Say you found a new apartment and you have to sign the lease and move in within a month. If you can’t give any notice to your landlord, then the only downside is that your landlord will just keep your last month’s rent even if you move out before then.
There’s no worry about putting your home on the market, dropping property values or buying a new home and mortgage when you want to move. You have the freedom to move.
- Access to Amenities
An amazing benefit to renting is the access you get to amenities. This can include things like rooftops or terraces with bbqs and lounge areas, party rooms, gyms, work spaces, and pools. These amenities are usually standard in any midscale apartment building and come at no extra charge to tenants.
If you own a home and want access to amenities like these, you’ll definitely be paying extra. You’ll need to pay for a monthly gym membership, rent a coworking space and more. If you want a pool, you’ll have to spend a lot of time and money for installation and maintenance. Even if you own a condo, you’ll have to pay maintenance fees for this.
- Lower Insurance Costs
Although homeowners in Canada are not required to have home insurance, it is greatly suggested to have. Insuring your home gives you peace of mind, and protects you from replacing anything in your home if it ever gets stolen or damaged.
When you rent a space, you will need to pay tenants insurance. This is more affordable than home insurance. The average home insurance in Canada is $960 ($1,250 in Ontario), compared to $276 for renters insurance.