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Rent
vs. Buying
By: Robin Sukhu - Real
Estate Agent
Re/Max 2000 Realty Inc.
Ordinary
Canadians have, for the most part, accumulated
wealth by owning a home and, when all
is said and done, there is something to
be said about living in your own home.
It is a tangible thing that you can see,
touch, and make use of when the economy
gets wobbly and investment values start
to slide. You can’t live in an eroding
RRSP or Mutual Fund!
If
you take some of what’s left of
your RRSP, move out of your apartment
and buy a $300,000 detached home with
5% down and a mortgage of $292,837 (including
CMHC insurance premium) at 4%, you will
be further ahead. Consider the facts:
From
1996 to 2006, home values appreciated
by over $100,000. That’s 3.3% per
year! |
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If the home you purchase appreciates by only
2% per year, your $300,000 home will be worth
$358,527 in 10 years and you will have paid
your mortgage down to $208,713. You will have
a valuable asset with an equity of $149,814
that, unlike your RRSP, can be taken out TAX
FREE!
Truly speaking, there is nothing to think
about! Rent pays your Landlord’s carrying
charges and helps him to accumulate wealth.
What does it do for you?
|
| Return
on Payments at end of 10 years |
Renting |
Buying |
| Home
Value at end of 10 years |
NIL |
$358,527 |
| Less
Mortgage Principal Owing |
|
$208,713
|
| Net
Asset Value/Home Equity |
NIL |
$149,814 |
| |
|
|
| Monthly
Cost Comparison |
Payments
to Landlord |
Purchase
Costs |
| Monthly
Payments |
$1,200
|
$1,540 |
| Insurance/Taxes
|
$40 |
$280 |
| Total |
$1,240
|
$1,820 |
| |
|
|
| Cost
Comparison over 10 Years |
Payments
to Landlord |
Purchase
Costs |
| Total
Payments over 10 years |
$172,887 |
$219,400 |
| Plus
Down Payment |
|
15,000 |
| Total |
$172,887 |
$234,400 |
|
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| Renting
will give you $NIL return at the end of
10 years. Buying will return you a net asset
of $149,814 at the end of 10 years! And,
as you pay more off your mortgage, your
net worth will increase!
MORE
IMPORTANTLY, for 10 years, the
additional space, your neighbourhood,
the backyard, the garden, the basement
recreation room or additional income will
have improved the quality of life for
you and your children, and you will have
set the Rules for living, not your Landlord!
I venture to say you will have participated
more in your community’s activities
and become a more responsible citizen
and serious family person!
Can
a RRSP or Mutual Fund do that for you?
When
you decide to buy your first home, GIVE
REG AND ROBIN A CALL. We look forward
to hearing from you!
©Reg and Robin Sukhu
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Rent
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Ordinary Canadians have,
for the most part, accumulated wealth
by owning a home and, when all is
said and done, there is something
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own home. It is a tangible thing
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