Why It Pays to Buy
Those on the side of renting cite the flexibility of not being tied down financially and not having the maintenance or cost of upkeep associated with owning. Some of the hidden costs of home ownership are things like home insurance and property tax which you will continue to pay long after your mortgage is paid off.
The obvious answer as to why it pays to buy is that you build up
equity in a home over time rather than building up equity for your
landlord. And a little (or a lot) of equity does a number of things for
you: It provides a safety net you can fall back on if necessary. Used
as security against a loan, it provides a less expensive way to
borrow. And you can use it as a downpayment to step up in the market
should your housing needs change. Even if your home never appreciates
in value, the equity you build is a useful thing.
In a growing housing market, the value of your home increases while your
payments do not. In Toronto home prices have increased by about 6%
year-over-year for the past ten years. And, with interest rates
continuing at all-time lows, it is a great time to buy. The big caveat
here is that interest rates will go up at some point, perhaps
substantially. Those who are on the fringe of home affordability now,
may no longer be able to afford their payments at a higher interest
rate.
But my favourite reason for believing in buying a home is that it
becomes a kind of “forced” savings plan. Some people, myself included,
have a difficult time committing to retirement savings plans. A home
can be a sort of retirement savings plan. After years of paying down
equity along with some increase in property value, you can downsize your
home in your golden years and use the proceeds towards living expenses.
If you’re convinced and ready to take the home buying plunge, a @REALTOR is ready to help.
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