Should I Rent or Buy? Ask an Agent: John Haddad
Some people find themselves in an interesting financial situation or life position where they may be on the fence between renting and buying a home. There are plenty of reasons a person may want to continue in a tenanted property and plenty of others that may mean it’s time to settle down and invest in a property. But how do you know?
We asked John Haddad his opinion on what determines whether a person should rent or buy.
John explains that, at first, it is important to determine how long you intend to stay within the city or even the country. Are you here on a short job contract, or only in the country for a couple of months of the year? If this is the case, it may be better to look into a rental. It is low commitment and can even come furnished if need be. On the other hand, if you’ve been looking into an investment property regardless, you could consider buying and then renting your home out with a property management company afterwards.
Second, John suggests taking a look at the stability of your income. Are you able to support a regular mortgage payment? What kind of interest rate will your pre-approval provide you? Can you afford a downpayment? These are all things to consider to be sure that you can comfortably afford regular mortgage payments toward a home. If you can, you should consider buying! Renting will only mean you are paying someone else’s mortgage for them. And in reality, a mortgage is typically less than what landlords charge for rent each month, in order for them to make money off of their investment property! You’ll be putting money back into your own pocket instead, and potentially putting out less money each month.
An average 1-bed apartment right now in Ottawa is going for around $1800 a month. This is equal to a $43,200 investment over a 2-year period. If it is within your budget, you could more easily use this money as a 10% downpayment on a $432,000 condo instead! As a first time home buyer, you could actually get away with a 5% downpayment. meaning you’d only need $21,600.
Finally, John explains that buying a home is an investment. Housing prices historically are on the rise. After owning a home for 4-7 years, you could sell and upgrade using the equity you have earned on your current home!
John Haddad, REALTOR®
john@newpurveyors.com
613 869 2620
