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The benefits of homeownership versus renting

There is a common misconception that in the current economy, homeownership is nearly impossible, but did you know that renting can end up costing you more per month than the average mortgage payment?

While there are pros and cons to both renting and owning a home, there is often a sense of apprehension when it comes to becoming a homeowner because it can seem overwhelming.

There are lots of things that may seem daunting about buying a home. Maybe you don't know how much you can afford, how much you’ll need for a downpayment, or if you’re going to save money in the long run.

<who>Photo credit: Prospera Credit Union</who>

Here are some of the financial differences between homeownership and renting, and how you can figure out if homeownership is right for you.

Investing

When you’re renting, you’re putting your money towards a place to live, but it isn’t an investment. Your money may even be going towards someone else's mortgage payment.

By making mortgage payments rather than rent payments, you’re investing in an asset that you will eventually own and could also potentially profit off of.

Calculating how much you can afford to pay as a downpayment and for a mortgage makes homeownership less intimidating because it puts your financial capabilities into perspective.

For resources about calculating what you can afford, click here.

Savings

Did you know that the government offers incentives and rebates to homeowners? While renters save because they don’t have to pay for home repairs, they are not offered credits or tax savings.

<who>Photo credit: Prospera Credit Union</who>

Some of these incentives include a First-Time Home Buyer Incentive, which helps first-time homebuyers who have the minimum down payment for an insured mortgage finance a portion of their home purchase through a shared equity mortgage with the Government of Canada.

Another includes the Home Buyers' Amount, a $5,000 non-refundable income tax credit on a qualifying home acquired during the year. For eligible individuals, this credit provides up to $750 in federal tax relief.

There is also a GST/HST New Housing Rebate. After buying a home you may qualify for a rebate of part of the GST or HST that you paid on the purchase price or cost of building your new house, or the cost of significantly renovating or building an addition to your existing house.

<who>Photo credit: Prospera Credit Union</who>

If you would like more information about these offers, click here.

Prospera Credit Union is also offering their own incentive right now. When you get a mortgage through them you can get a great rate plus receive up to $3,000 cash back.

Profit potential

When you own your own home, in the long term you’ll likely end up turning a profit when you decide to sell.

Profits that come from the sale of your house can then be used to upsize your home as your needs expand. Or you can downsize to a smaller place and use the profits for travel, retirement or just add the money to your savings.

Despite fluctuation, home prices in Canada have steadily increased over the last decade, so you will be making money in the long run by investing in owning a home.

While buying a home is a major commitment, knowing that your monthly payments are going towards an asset that you will eventually own, being aware of the rebates and incentives available from the government and knowing that your investment will garner you a profit if you ever decide to move makes it seem like a less intimidating task.

If you have any questions about mortgages or homeownership, contact Prospera Credit Union to connect with an advisor.



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