When buying a house on top of the price for that house is the land transfer tax, an extra charge that costs at least 1.5 percent of the purchase price you pay; in bigger cities like in the GTA however, it can climb up to 4 or 5 percent which equals about the amount paid in rent for place of similar quality per year. Plus if you choose to sell the house any number of years down the line you pay at least 5 percent in commission to your realtor. With moving costs and legal expenses thrown on top of these administrative costs, buying and selling a home alone will cost an extra 10 percent on what you pay to purchase that home.
Other costs are the regular fees that come with living out of the home. From property taxes and mortgage payments to maintenance costs and other expenses, the cost of owning continues to add up year after year. In renting a property of a similar nature to a home you could own, financially you would be saving a lot of money in the long run as these operating costs tend to far outweigh the cost of rent.
Many buyers also fail to remember that a mortgage leaves a forever changing impact on your financial situation. The evidence of Canadians at record household debt suggests that when working out the details of a mortgage, most homebuyers will end up with monthly payments at the maximum they can afford barring any unforeseen change in employment status. Should the worst happen and the job front begins to look murkier, people aren’t planning for assets and relaxation; they’re planning to pay down debts on the mortgage well into the golden years.
In contrast renting, while taking away the asset of the home itself, ensures your financial situation will not be affected by the extra costs and impacts of a mortgage. As the country continues to struggle with moving the economic recovery forward, it may be best for many potential buyers to put off that home purchase and continue with renting for now. As time goes on and the standard of living becomes stable once again, people can be ready to find their hidden assets and buy that dream home.