‘Don’t pay off someone else’s mortgage’
Many of us remember our parents telling us it is better to own a home than rent one at some point in time – “don’t pay off someone else’s mortgage,” they’d say.
They could not have been more correct.
So why are many people still choosing to rent when owning a property can be so financially rewarding?
Truth is, many people don’t realize that if you can afford to rent, you can likely afford to buy. In fact, you may be surprised by just how much house you can afford without changing your monthly payments.
With Calgary’s low vacancy rates and high net migration, renting can be expensive and options may be limited. The best rental units get swooped up within days of being listed, and the most desirable locations come at a premium.
Yet, there are many great condos available for purchase in the same areas that would be less expensive to own.
In most cases, it is both cheaper and easier to buy than to rent. In fact, all that’s required financially is a stable income and good credit and down payment, which can come from an RRSP, savings or even a gift from a family member.
Take the example of someone who is paying $1,500 a month in rent – typical for a two-bedroom apartment in Calgary. With a $15,000 down payment, that person could purchase a property for as much as $315,000 without changing his or her monthly payments.
And with every monthly payment, the mortgage would be paid down. Even people with the most modest math skills can figure out that retaining equity every month is far better than paying off a landlord’s mortgage.
Furthermore, it is easier to find a $315,000 condo in Calgary to buy right now than it is to find a nice apartment for $1,500 per month. Just ask anyone who has tried to rent lately.
And that isn’t even touching on the added benefits of no longer worrying about being evicted, your lease ending or the landlord selling the place. A condo or home you own is a far more certain place to live than one that you rent.
Nolan Matthias holds a bachelor of arts in Economics, is the co-founder of Mortgage360 and the author of The Mortgaged Millionaire. Call Nolan at 403-615-6132 with your questions or to set up an appointment with an Accredited Mortgage Professional (AMP).