Are you a candidate for Home Ownership? 

Are you a good candidate to be a homeowner?  Should you buy or should you rent?  There are several considerations.

Are you paying rent?  If your expectations are modest you can probably own for about the same as it would cost to rent. According to a study by Clayton Research Associates, approximately 40 percent of the people currently renting in the Halifax area can afford to purchase their own home and a similar study by Canadian Mortgage and Housing Corporation (CMHC) suggests this number could be as high as 60 percent!   

Although housing prices are rising in the area, they are still reasonable and mortgage interest rates are low which means that you can now afford to buy a home or finance a more expensive home than you could a few years ago.   

Is home ownership a “get rich quick” scheme?  Home ownership is a great investment and, although it takes some time to realize the gain on your investment. The last few years are showing us that people are realizing very good returns when they sell, and an appreciation in the value of a principal residence is tax free.

A home mortgage is a type of forced savings plan.  Historically, home ownership has been a secure, low-risk, stable, long-term investment.  You can enjoy living in your home and each mortgage payment buys you a larger portion of your investment.

A recent study conducted for the Canadian Home Builders Association says that the net worth of homeowners who buy a home will be $167,000 greater than a renter after 30 years.  That is assuming that renters would invest their down payment as well as the difference between rent payments and the cost of owning a home (including mortgage, taxes and repairs), which takes discipline most of us don’t all have.  The same study concludes that those who bought 30 years ago have a net worth today that is $198,000 more than renters. 

Are you tired of the noisy neighbours in your apartment building?  Do you want more space to raise a family or for hobbies? You may appreciate the lower density of a detached home or even a townhouse.  You will usually get more storage, yard and workshop space when you purchase a home.

Would you like a more family-oriented neighbourhood to raise the children in? Often, being part of a community of families with common interests is beneficial to everyone in the community.  Are you interested in having a backyard to garden in, for the children to run around in or just to relax in?  You also have to mow the grass and shovel the snow, so there is some effort involved in maintaining those spaces but there is a lot of enjoyment as well.

Do you just want to live somewhere that you have some control over and that you can eventually own?  With home ownership you are free to choose your own paint colours and renovate if you would like a better kitchen or bathroom.

Government incentive plans through CMHC insure lenders against people defaulting on their mortgage payments.  This allows the lenders to let you take a mortgage on a home with only a five percent down payment. As a first-time homebuyer, you can borrow against your RRSPs for your down payment and pay back that money over a period of years, with no income tax payable on the money you’ve borrowed.

Mortgages are much easier to pay off now and by accelerating your payments and making lump sum payments on mortgage anniversary dates, you can have a 25-year mortgage paid off in as little as ten years!

Whether you rent or own, you will always have to pay for shelter.  Why not pay yourself?