New Study Reaffirms Benefits of Home-ownership
Matrix Mortgage Global – New Study Reaffirms Benefits of Home-ownership
If you are wondering whether you’d be better off owning a home or continuing to rent, the data is in. According to a new study[i] released by Mortgage Professionals Canada, home ownership is the clear winner in almost all cases.
Despite rising home costs and interest rates, the report found that Canadians who invested in a home were better off long term than those who continued to rent. Will Dunning, chief economist for the mortgage brokers association and author of the report found that while renting could be less costly upfront and in the short term, the net costs of owning were less – especially over time.
This is true in part because the cost of a mortgage is generally fixed over a term, while rent tends to go up every few years. The result is that the cost of renting rises faster than cost of owning. Also, when you consider how much of your mortgage payment is toward the principal cost of your home, ownership makes even more sense.
The report found that on average, owning costs on average $541 more per month than renting, but when you factor in principal repayment, the cost of owning on average is $449 less than renting. In short, while you may be paying more, your net worth continues to go up.
When comparing owning to renting over both five and ten year terms, the report found:
Scenario 1: Interest rates remain the same (approx. 3.25%) – after ten years, owning on average will be $1014 less expensive than renting.
Scenario 2: If interest rates rise to 4.25% after a five year period, owning on average becomes $1295 less expensive than renting.
Scenario 3: If interest rates rise to 5.25% after a five year period, owning on average is $726 less expensive than renting.
Other reports prior to this one have found that despite rising home prices, many young Canadians still aspire to one day own their own home. While young people it seems, have more barriers today such as higher interest rates and the new mortgage stress test, they are nevertheless determined to become home owners.
If you would are one of these aspiring home owners and are wondering how you can finally stop renting and become a home owner yourself, the team at Matrix Mortgage Global would live to help. Contact us today at 1-800-542-0601.