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How to know when to rent or buy.

Spring usually means that the housing market heats up with lots of listings flooding the market. But, is buying the right way to go for everyone? Or should you rent? It’s a big decision. We break down some things to think about.

What you need to consider when making the decision to rent or own.

There are three key questions to start with when thinking about whether to rent or own: what you want, what you can afford and your lifestyle.

Once you’ve got a better idea of what you are looking for, meet with your financial planner to discuss where you’re at with your money. Crunch some numbers together and compare the costs. Take a look at mortgage rates too.

A general guideline to determine whether you can afford to buy is to allow no more than 30% of your gross monthly income to make your monthly housing payments.

Factor in additional costs to home ownership.

Yes, there are not only property taxes, but also maintenance costs and sometimes strata fees, depending on what you buy.

Plus there are one-time closing costs, things like: legal, appraisal and house inspection fees. So you’ll want to factor in these extra costs too. Don’t just look at the asking price.

All about the down payment.

Do you have savings or investments you can tap into to put towards your down payment? For example, on a $350,000 home – you’re looking at a down payment of at least $18,000, if not more. Get some help from your financial planner on a savings plan for your down payment so you’ll be in a better place down the road when you’re ready to buy.

Do a budget forecast to determine if you should rent or own.

Something else you might not plan for is paying a bigger hydro, gas and sewer bill, especially if you’re moving into a larger home. It helps if you do a budget forecast to see how things will look before you buy to get an idea of how your cash flow would be impacted.

Assess where you’re at and where you’re headed.

A home is a very valuable asset – besides being able to put down roots and decorate your house how you want, you’re building up equity and increasing your net worth with every mortgage payment you make.

Take the time to break out the costs and take a good look at your current situation and your next five years. That will help you determine whether you should rent or buy. Remember, we’re here to help.

 

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Coast Capital Savings Federal Credit Union provides advice and service related to deposit, loan and mortgage products. Coast Capital Wealth Management Ltd provides investment and financial planning services. Coast Capital Financial Management Ltd. provides advice and service related to segregated funds, annuities and life insurance products. Worldsource Financial Management Inc. provides advice and service relating to mutual funds. Mutual fund values change frequently and past performance may not be repeated. Commissions, trailing commissions, management fees and expenses may all be related with mutual fund investments. Important information about mutual funds is contained in the relevant fund facts and simplified prospectus. Please read the fund facts carefully before investing. Only deposits held in Canadian currency, having a term of five years or less and payable in Canada are eligible to be insured under the Canada Deposit Insurance Corporation Act.