Jump to Main Content

Should you sell or rent your home?




You've decided to move to a new home. Whether you've outgrown your current home or want to relocate for neighbourhood and lifestyle, you may be wondering if it makes sense to keep your current home and rent it out, or simply sell it when you pack it up and move to a new place.

What's right for you?
Sometimes it's better to take all the money from the sale of your current home and put it toward your new home. Other times, there are plenty of good reasons to own two homes, living in one and renting out the other.

Both choices depend on qualifying for the mortgage amount you need and both can have a positive effect on your financial situation for many years to come. When you decide, consider the following advantages of owning one home or two and see which one feels right for you.
 

 
One home: Sell


You sell the home you live in now and use your equity to buy another home.

Two homes: Rent & Buy


You keep the home you live in now and rent it to someone else while you move to a new home.

Advantages

A bigger down payment
If your home has gone up in value, you can put more money down on your next home. 

Lower payments
A large down payment could result in lower mortgage payments and let you pay down the principal amount faster. 

Savings
A lower mortgage payment could allow you to put more money into other long-term savings goals, like retirement or your children's education.

Money from rent
Rental income could help you pay off the mortgage on your first home. 

Building equity in two homes
Because you own both homes, you build equity in each one. The combined equity could be worth a lot of money by the time you retire. 

Tax advantages
As a landlord, you could set up a tax-efficient way to collect rent. You also need to understand how you will be taxed when you sell a rental or investment property. Be sure to talk to a tax specialist about how to become a tax-smart owner. 

Other factors

Expense
The money you make when you sell your primary residence in Canada is tax-free. But you'll need to plan for selling costs, moving costs, and closing costs on your new home.

Time and effort
Renting out your home makes you a landlord, with all the responsibilities that come with the job. 

You must be prepared for regular maintenance, turnover costs when tenants move out, and the possibility of downtime, when the home goes unrented. 

 

Your next move

One home or two is not an easy decision to make on your own. Selling your home comes with its own set of challenges and becoming a landlord adds additional levels of responsibility. Good advice from experienced professionals will help you make the right choice.

Get started by talking to a Meridian Mortgage Specialist

LIKE THIS
SHARE THIS