Date Posted: September 13, 2018
A new report released by Mortgage Professionals Canada (MPC) compares the cost of renting versus owning a home and the results may surprise some.
The results found, in the majority of 266 scenarios analyzed from across the country, the monthly costs of homeownership were lower than renting an equivalent home now and over time.
"The report demonstrates that the money Canadians are spending on monthly rent, if used instead to finance a home, would be a very beneficial investment over time," explained Will Dunning [Chief Economist for MPC], author of the report. "The costs of owning and renting continue to rise across Canada. However, rents continue to rise over time whereas the largest cost of homeownership – the mortgage payment – typically maintains a fixed amount over a set period of time – usually for the first five years. The result is that the cost of renting will increase more rapidly than the cost of homeownership."
Although given some of the recent markets, combined with new mortgage approval rules, many Canadians felt that they may be long time renters. The report suggests that if individuals have the opportunity to invest into homeownership they will be better off in the long term.
“The study compares the costs of renting five and ten years in the future. It finds that if mortgage rates remain at 3.25%, in 10 years the cost of ownership (on the net basis that takes out principal repayment) will be lower than the cost of renting for almost 98% of cases. On average, the net cost of owning will be $1,295 less than the monthly cost of renting equivalent dwellings. If the interest rate rises to 4.25% after 10 years, the cost of ownership is less than the cost of renting in 92% of case studies, with an average saving of $1,014 per month.”
Wondering if homeownership is in your future? Contact your trusted Mortgage Broker today.