One of the biggest decisions facing those who want to live in condos is whether to buy or rent. While many people feel that renting is throwing away money, it does come with its advantages.
Similarly, there are definite benefits to owning your unit, but it’s important to buy at the right time, both in terms of the property market, and in terms of when you are in the right stage in your life, with the necessary funds in your bank account.
Let’s take a look at the advantages and disadvantages of renting vs. owning.
There’s no denying the fact that renting in Toronto isn’t cheap, with many people spending around $2,000 per month, or 30-50% of their income, on renting just a one bedroom condo.
Furthermore, they often can't decorate or renovate the unit. Many renters are all too aware that this large chunk of their hard-earned cash is going straight into someone else’s pocket, never to be seen again.
Thanks to the 2017 fair housing plan, landlords are now prohibited from raising rental prices by more than 2.5% per year. However, many people feel that rental rates were already so high that it doesn’t help them very much. Furthermore, landlords can still set the price of a new lease at whatever the current market demands.
On the other hand, renters don’t need to spend years saving up for a large amount of capital required to buy a condo. Renting also offers flexibility that owning a home doesn’t.
If for any reason you decide that you want to move to another province or another country, this is fairly simple for a renter. Renters also have a relatively easy time when things need to be repaired or replaced. Just one phone call to the landlord and they will call in the appropriate people to repair it and foot the bill.
One of the main advantages of owning a home is that rather than paying a significant sum of money to someone else, that money is building up your home equity.
However, some still question whether all of the costs involved in purchasing a condo are really worth it in the long run.
As well as the 20% down payment, you'll need to consider condo fees, property tax, and insurance. If you then only own your condo for a few years it may not be financially beneficial, however, if you plan to own your condo for longer then you will most likely benefit eventually.
Buying a condo pre-construction generally means that you can pay in installments, which can make life easier for first time buyers, and they generally get a better price overall. Condo owners must also consider the fact that, while condo fees sometimes cover some maintenance, they will most likely be responsible for other maintenance costs, and it can get expensive.
Buying a condo is a huge commitment. If you’re not ready to settle down in one place for several years, you may be better off renting.
If you plan to live in the same place for years and years to come, then buying is usually the more sensible option. It all comes down to knowing when the right time to buy is for you.