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Renting vs Mortgage: Which Option is Better?


Renting vs Mortgage or Buying is an ongoing debate in the minds of many Canadians year after year. The answer is not a simple one and every situation. Paying rent is like throwing your money at strangers, and as some of you may have heard, they say rent money is 'dead money' with no returns whatsoever. This is not entirely true as even a house owned by you, whether you are still paying your mortgage or whether it has already been paid, has some 'dead money' involved. Settling this debate depends on a lot of factors such as your finances, the current situation of the property market, your lifestyle, your marital status etc. So overall, the debate runs. So overall the debate runs much beyond your finances or affordability.


Advantages of renting


Greater flexibility: There are several advantages of renting including flexibility. You are not tied to the property as against a mortgage. Once your lease on the rented property is over (usually a period of 12 months) you can move from the property to a place of your liking. If you decide to move on from a mortgage property there are financial implications such as penalties and taxes that you would need to pay for breaking the mortgage.

Hassle-free life: Owning a home is quite cumbersome as compared to mortgages. You will need to invest your time and energy in the maintenance and upkeep of the home, and you would need to also use some of your money towards this cause. Renting on the other hand is hassle-free as maintenance is the headache of the owner of the property.

Economical: Renting is also the cheaper alternative as against a mortgage. You don't need to pay a big mortgage amount every month and hence renting is a more economically viable option. Moreover, you can choose the area you want to rent in, and opt for cheaper rented places if your economic situation warrants so.


Advantages of Mortgages


A sense of belonging: Owning the house means you are the boss and it is up to you if you want to change the floor, the kitchen, paint the walls or just about any other aesthetic or other changes you would like in the house. If you are renting a house, you would need permission from the owner before you can do any of these.

Stability: Owning a house brings in greater stability as you can't be asked to leave the house when the owner so desires. There are times you are staying happily in a rented property but the owner suddenly decides to sell that property. In such cases you will be left with no other option than the pain to look for another rented place and move out in the timeline given to you or according to your rent agreement,

Capital increment: When you own a home and the value of your home increases over a period of time, you gain financially what is known as capital gains as and when you choose to sell the property.

Home equity: As you pay your mortgage sum every month you are building equity in your home. A few years down the line you can actually take out this equity in case you need to renovate the house or for study purposes etc. This is not the case in rental properties where the amount you pay as rent is spent by the landlord at his or her discretion.


If you are looking to buy a house and have questions about mortgages, do contact LendX Financial in Brampton.

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