If you’re trying to decide what is the better option - owning versus renting - this article is for you. We’ve come up with seven immediate benefits of owning a home that can’t be said for rental units. You'll start to see pretty quick which option will work best for your hard earned dollars and give you the future you deserve.
1. Build Equity
The first major benefit of home ownership is that your money is going into your pocket, not someone else’s! When you make payments on your house, your money is going towards your mortgage, increasing the equity on your home. If you ever decide to sell your home you’ll be making back what you put into it, which clearly beats paying rent month to month and never seeing that money again.
You also don’t have to worry about losing the security deposit if certain contractual agreements aren’t met in the rental agreement. This could range from minor damage to the property to breaking the lease. Combined with appreciation in property values, your home equity can be a rewarding way to increase your overall net worth.
2. Freedom to Customize
This brings us to the second benefit of owning a home, which is the ability to customize your home to your liking. Depending on your rental agreement, most changes to your unit will be prohibited by your landlord and the rental contract. In some cases, you may not even be able to change the paint! Adding new countertops or appliances is probably out of the question, too.
Why be oppressed and follow someone else's rules if you don't have to? When you own your home, you can customize it as much as you want, at your own pace, without referencing a landlord or contract.
3. Alter Your Living to Suit Your Needs
Another benefit related to customization is that you can also make adjustments that can save you money. For example, if you wanted to be more energy efficient you'll have a lot more options once you own your own home. There are certain things you can do as a renter in this regard, such as reducing your power usage, but as a homeowner, with complete control over your property you could install solar panels or even completely change your home's insulation. While this may require some financial commitment up front, over time the savings can really add up.
4. Access to Government Tax Incentives
The fourth benefit really only applies to first-time home buyers but is still relevant to what we're talking about. Mortgage payments can be viewed as a long-term savings plan, and, if you are a first-time home buyer, there are government programs available to help you own your first home sooner.
- Home Buyers’ Plan: provides first-time homebuyers access to their RRSP savings (up to $25,000 per person) to purchase or build a home. You are also granted 15 years to repay your RRSP loan tax-free.
- First-Time Home Buyers’ (FTHB) Tax Credit: the Government of Canada introduced this tax credit to assist FTHB with the costs associated with the purchase of a home - a $5,000 non-refundable income tax credit amount on a qualifying home, as of January 2009. For an eligible individual, the credit will provide up to $750 in federal tax relief.
5. More Stability
The next benefit is in regards to cash again. A new home mortgage has more financial stability than rental units. It isn’t uncommon for landlords and certain contracts to stipulate that rental prices can increase month to month, without warning. There are usually stipulations as to how much your rent can increase but it's nonetheless true that your rental price isn’t necessarily fixed. With new homes, it’s common to get five-year fixed mortgages that ensure you have equal monthly payments for at least the first five years. This will better enable you to effectively plan for your financial future. You may also find that your mortgage payment is close to what you'd pay to rent, with the all the added perks of home ownership!
6. A Growing Investment
This benefit is one you may have already come up with on your own: self-investment! Purchasing a new home is an investment in your future. As we covered in the first point, you’re putting money into your own pocket and not into someone else’s. However, this doesn’t simply mean you are making your money back, but you are potentially making money over time as your property appreciates in value.
This is especially true for new home builds. They tend to appreciate in value over time as the community around it adds more amenities and finishes its final stages of development. Buying a new home in the early stages of development is smart because you can enjoy maximum appreciation on your home over time.
There are also opportunities to make money from your home that are more short-term. If you have a furnished basement you could consider turning it into a secondary suite for extra rental income. Instead of your rent money going towards building someone else's equity, someone else's rent money could be building yours!
7. A Sense of Community
One of the things that can initially seem daunting about home ownership can actually be one of its biggest advantages. Because homeowners tend to stay in their homes for far longer than renters, once you own a home you may find yourself naturally becoming more involved in the community around you and getting to know your neighbours better. When you're renting there's far less incentive to become involved in your local neighbourhood because you know you'll be moving on, so owning a home allows you to really put down some roots.
Overall, we think it's pretty clear that the benefits of owning a home far outweigh the benefits of renting. Once you've saved up for a down payment and decided on the type of home you want, you'd be surprised to see what you can afford. You're closer than you think to enjoying the many benefits of living in your very own, brand-new home!
*Originally posted May 14, 2015, updated January 3, 2019.