Rent vs. Buy

There is a long-standing debate whether you are better off to buy a home or to rent.

Truthfully, there are pros and cons to both sides of this equation, and it comes down to asking yourself a few hard questions.

Are you cut out for home ownership?

Home ownership is not for everyone. Are you comfortable with long-term commitment? (and no, I’m not talking about your neighbours, although that does factor in to it).

Home ownership can be a great investment, but you need to be prepared to commit for the long haul. There are costs associated with purchasing and maintaining a home, and it is a well-known fact that you’ve got to stay put for about 5-7 years (in most markets) to “break even” on a house purchase. After that, the asset value grows more quickly.

How’s your cash flow?

While a mortgage payment may not be that much more than what you are paying in rent, be warned that is one of a number of costs that you are going to have to shell out for- including maintenance, taxes and potential condo or other fees. These add up- and if you are already stretched pretty thin, home ownership may hurt more than it helps.

It’s a good idea to stress test your budget for a few months before you buy a home, just to make sure that you’ve got enough wiggle room to manage.

Down payment

Speaking of money, do you have a down payment accumulated? You’ll need at least 5 percent down, and that can take time.

It’s a good idea to practice saving and paying down debt at the same time to make sure that you can do it.

How handy are you?

Are you Ms. or Mr. DIY, or are you like me, who heads for the hills when something breaks (partly because I’m the one who broke it, and partly because I’m not very good at fixing it.. sadly).

The beauty of having a landlord is that they do that kind of stuff for you.