If you're renting, you may dream about owning a home of your own - a place to furnish and decorate as you like... to set down roots... to enjoy a great neighbourhood, and to entertain friends and family. But you may be uncertain whether you're ready to make your move from renting to buying, especially if you haven't started saving. Fortunately, with today's low mortgage rates and more flexible down payment requirements, your first home may already be within your reach.
You may have many reasons for wanting to own your own home. You may be getting married, leaving your parent's home, moving to a new job, having children. You may want to establish yourself in a neighbourhood where you will feel at home. You may want a secure, permanent place for you and your family.
Whatever your reason, owning your own home can also be a good investment. The long-term investment value of a home remains very good. There is also sound financial reason to buy a home. Your home may be the single biggest investment you will ever make, one that could pay off significantly in the long run.
Consider this: the value of the average Canadian home has been steadily increasing. So the earlier you can redirect your money you currently pay in rent into paying down a mortgage, the faster you will start building equity in your home.
Does the increase in value represent a good investment? The answer is yes, because housing is typically a stable investment, offering good rates of return. Low inflation and low interest rates, demographics and immigration are all factors supporting the belief that a home will continue to be a good long-term investment, at least in most parts of Canada.
Perhaps more than ever, location is the key factor driving price increases. In a strong housing market, homes in particularly desirable areas are more likely to see above-average price increases. In weak housing markets, these homes tend to retain their value better.
Although no one can predict where prices will be 25 years from now, the average price of a home in Canada has risen substantially in the past 25 years, making a home investment one of the best investments available today.
There is also a tax advantage to purchasing a home. When you sell your principal residence for more than you paid for it, the increase in value, known as capital gains, is yours tax-free. So if, for example, your home sells for 25% more than you paid for it, it's money in your pocket, rather than the government's.
At the end of the day, one of the biggest considerations isn't the market, mortgage rates or investment value, but rather your desire to enjoy the comfort and privacy of owning your own home. In other words, the best time to stop renting and start owning is when you are ready.