The financial benefits of owning your own home were recently confirmed in a survey conducted by Clayton Research Associates for the Canadian Home Builders Association. The company studied a number of different scenarios in 11 Canadian cities and arrived at some convincing statistics.
If you purchased a home 30 years ago with a 10% down payment, your net worth in 1995 would be from $101,000 to $396,000 higher than if you had rented and invested your money in stocks and mutual funds over the same period. Over the last 20 years, the difference worked out from $75,000 (worst case scenario) up to $283,000. Most Canadians upgrade every 7 - 10 years. Proof shows that in most cases, moving up to a bigger or better house generates even greater profits.
Here's How It All Works:
Owning a home costs more in the short term:
● You incur more incidental expenses
● Maintenance costs, utilities, and taxes all have to be paid
● Your mortgage may well start off being more than the rent you pay initially
However, after a while the equity in your property starts to grow. The rent you were paying increases annually, while your mortgage remains the same (subject to interest fluctuations at term end).
When you rent you are helping your landlord purchase his or her property and realize the future profits.
When you own you pay the entire mortgage and the costs, but you get to keep all of the profits for yourself.
As an owner, there will come a time when your mortgage is paid off in full, and you will be living rent-free and mortgage-free. Tenants cannot look forward to this situation in later years.
If you rent and invest, you are taxed on all the profits you make. However, if you own a principal residence, any profits you earn when you come to sell it are tax-free - with no limit!
Home Ownership
● Ownership makes future profits for you
● If you own, there will come a time when you are mortgage-free
● If you own, your profits on a principle residence are tax free with no limit
Rental
● Rent makes future profits for your landlord
● If you rent, you will never be rent- free
● If you rent and invest, your profits are taxed
Studies show home ownership makes more financial sense than renting
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