11/29/2022
🏡 Renting or owning a home?
There's no easy answer to which is better, but first, survey your personal situation and readiness for homeownership.
The first (and most important) thing to do is to compare the cost of rent to mortgage payments in your neighbourhood. The housing market will exert a significant influence on your decision-making. As a general rule, if you’re paying more than $3,000 per month in rent, you can probably do better on a mortgage.
Can You Pass the 40% Rule?
The “40% rule” says you should be able to meet your housing costs (principal and interest, taxes, and heat), as well as your other registered debts (such as car loans and credit cards), with no more than 40 percent of your gross income. Not only is this a handy guideline for your personal planning, but it’s also a measure applied by many lenders. Relatedly, you should be able to cover monthly costs such as your housing, food, and transportation (known as “fixed costs”) with 50% to 60% of your net monthly income. Any more than that, and you’re likely to struggle.
How Stable is Your Employment Situation?
Without stable employment, you’ll have trouble convincing a lender to give you a mortgage, but more importantly, you may run into problems meeting your obligations. Do a realistic survey of your employment picture before making a decision.
How Long Do You Plan To Live in Your Home?
With all the talk of investments and equity, it can be easy to lose sight of some basic truths. As a general rule, the longer you live in a place, the better the investment. This is partly because there are numerous costs associated with the transfer of real estate.
Are You Ready for the Commitment?
Homeownership is a big step. It means you’re saying “yes” to forking over a chunk of change for property taxes, home insurance, maintenance, utilities, and a mortgage. Are you really ready for it?
Want to discuss this further? Leave us a comment or give us a call!
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