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Should you rent or buy?

Deciding whether to rent or buy isn't always easy. Renting and buying each come with their own unique advantages and drawbacks, so it’s not as simple as comparing monthly rent to monthly mortgage payments. Everyone’s situation is different. We can help you weigh the pros and cons to find the right choice for you.

Pros of buying

A long term investment that pays off
When you pay off your mortgage you can borrow against the value of your home (also called accessing equity) to pay for other big purchases, like renovations or education.

Tax benefits
The Canadian government offers tax benefits to homeowners. For example, first-time home buyers can claim the First-Time Homebuyer Tax Credit (HBTC). Plus, when you eventually sell your home you generally don’t have to pay capital gains tax.

Source of income
You can make money by renting out part of your home to help pay down your mortgage sooner.

Cons of buying

Additional expenses
Aside from your mortgage payment, you’ll also have to pay for things like home insurance, utilities, condo fees, property tax, and repairs. Plus, when you first buy your home, you also have to account for closing costs.

Lost investment opportunity
When you make a down payment on a home you’re giving up the chance to use that money for something else. If you invest your down payment it could grow in value faster than your home would.

Pros of renting

Predictable expenses
You always know what your rent is, and your landlord will generally cover things like repairs, so you won’t have to worry as much about sudden expenses. This can make it easier to set aside money for big purchases or investments

More flexibility
Renting makes sense if you don’t plan to stay in the same place long-term. It’s easier to move if you don’t have to worry about selling your home and you’re not committed to a mortgage.

Cons of renting

Ongoing expenses
Unlike a mortgage, your rent doesn’t go away no matter how long you pay it. You'll always pay the same amount (providing your rent doesn’t go up) unlike mortgage payments, which could go down.

No equity in your home
You can’t build equity in a home you’re renting. Every monthly rent payment is going into the hands of the landlord - it’s not an investment for your future.

More unpredictable
Your landlord can increase your rent once a year, which is something you wouldn’t worry about during the term of a fixed rate mortgage. They could also sell, prompting you to move. You don’t have as much control when you rent.

So what should you do? 

Are you looking for the flexibility and spontaneity you could get from renting? Would you prefer to invest in something other than a home? Do you want the stability and pay-off that comes from owning a home? Deciding to rent or buy depends on your individual circumstances and personal financial goals.

Looking for more advice on this? Find a mortgage specialist

Learn more about mortgages

How much mortgage can you afford?
How to qualify for a mortgage
Understanding down payments