Rick Bossom, AMP

Why Rent?

Average house rent $1,260 x 12 months = $15,120 for the year.  If you include an annual rental increase of 2% per year and you lived there for 5 years; your total rent payment would equal $78,636.00.

There are pros and cons to everything in life and  renting or owning is the same.  Things to consider are your lifestyle, future plans and the no brainer of a rental payment compared to more responsibility with a mortgage payment.   Owning your home is a commitment in time, energy and money but the rewards are great.  Pride of ownership, increase in personal equity and the ability to change any aspect of your home are some of the benefits.  This is a quick guide of approximate costs of owning or renting to help you decide which is better for your situation and lifestyle.

 If you owned a home with a mortgage payment like the rental payment above this is the approximate cost:

 
$ 247,000  Purchase price
$  -12,350  Down payment (can be gift from family, borrowed, saved or cash back)
$     7,391  Mortgage insurance (CMHC premium included in mortgage)

 $ 242,041 Total mortgage amount

 
Basic expenses

 Mortgage                     $1,108.61  per month  (4.29%, fixed 5 year term, 35 year amortization)

Property tax                  $   145.00  per month  (1,740.00 estimated property tax)

                                       $1,253.61  per month (or $15,043 per year)

 
Home maintenance    $    75.41   per month (average costing 2002 Stats Canada)
House insurance         $    37.50   per month ( $450 estimated house insurance per year)

                                         $  112.91   per month or $1,355  per year

 
Total payment             $1,336.52  per month                               

 
If you include a annual increase of 2% except for the mortgage payment (payment is fixed for 5 years); your total payment for 5 years would equal $82,134.  If Real Estate market values remained the same you would create $23,000 in equity just paying the mortgage.  Now, if the market increased only 2% per year, you would built $43,345 in equity.  You can see the smart money is in owning your home, not renting and paying somebody else's mortgage.

 
Renting for Five Years $78,636.00                 Owning for five years $83,134 but creating $23,000 - $43,000 in equity*        

 
 
THE UPSIDE OF RENTING

There is only a rental payment and usually no other costs involved unless you have renters insurance.  You also have ability to change locations quicker with as little as 1 months notice.

 
THE UPSIDE OF OWNING

 More long term security, if you decide to live in the home forever you can.  You build equity, if Real Estate values increase an average 2% per year combined with paying down the mortgage over the next 5 years you could gain $43,345 dollars in home equity.  No one can predict what will happen with Real Estate values but looking at past history, prices will go up.  In the end, your home is your home and you need to live somewhere, why not own your home and reap the benefits. 

There are  mortgage products available  with no down payment, no credit rating, damaged credit and great rates for people that maintain their credit.  To get your start owning your own home, or how to build your credit score email me for more information

The above figures are approximate and for example only.  Your situation may be different and Real Estate values may increase or decrease.  From 2002 to 2007 we saw an approximate average increase of 17% in market value per year.  The above mortgage payment is based on a five year fixed term at 4.29% compounded semi-annually not in advance with a 35 year amortization O.A.C.

 Find out how much you qualify for...

 
*These are for example only and should not be relied upon as Real Estate values do fulctuate and interest rates/terms are subject to qualification.  To find out options for your personal situation please find out how much you qualify for today. 

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