A new report by Mortgage Professionals Canada revealed that the monthly cost of homeownership is lower than the cost of renting equivalent housing for the majority of Canadians, and becomes even more cost-effective over time.
"The report demonstrates that the money Canadians are spending on monthly rent, if used instead to finance a home, would be a very beneficial investment over time," said Mortgage Professionals Canada Chief Economist Will Dunning.
"The costs of owning and renting continue to rise across Canada. However, rents continue to rise over time whereas the largest cost of homeownership – the mortgage payment – typically maintains a fixed amount over a set period of time – usually for the first five years. The result is that the cost of renting will increase more rapidly than the cost of homeownership."
Many Canadians have resigned themselves to the idea that they may become permanent renters, however this latest study shows that it may be better to avoid this line of thinking.
Why? It was found that those who can invest in homeownership will be significantly better off in the long term.
The study compared the costs of renting five and ten years in the future. Provided that mortgage rates remain at 3.25%, the cost of ownership (on the net basis that takes out principal repayment) will be lower after ten years than the price of renting for almost 98% of cases.
“On average, the net cost of owning will be $1,295 less than the monthly cost of renting equivalent dwellings. If the interest rate rises to 4.25% after 10 years, the cost of ownership is less than the cost of renting in 92% of case studies, with an average saving of $1,014 per month,” the study found.
But what if the central bank decides to hike interest rates to 5.25%? In this case, after 10 years, homeownership will still be less expensive than renting in 82% of cases, with a projected savings of $726 per month.
"While recent changes to mortgage qualifying have made the barrier to entry higher, those who can qualify will be much better off in the long term,” Mortgage Professionals Canada President and CEO Paul Taylor said.
It is important to note that in every one of the 266 cases, the cost of owning will be far lower than the cost of renting, provided the mortgage is fully repaid. In fact, in 25 years, on average, the cost of owning is projected at $1,549 per month versus $4,655 for renting an equivalent dwelling.
Referencing wealth data from Statistics Canada, the report also underscored that homeowners are distinctly better off financially compared to tenants who are similar in age and level of income.
Overall, Dunning encouraged Canadians to think long-term and consider investing in their own homes.
"Everyone wants to save for their future, but rising costs, including rent, are making that more difficult. The lower life-time costs of homeownership mean that owners have more ability to save for retirement than do renters. The financial benefits of homeownership go beyond equity accumulation," he concluded.
Many of us feed our lawns at the first signs of spring, but did you know that autumn is the most important time to fertilize?
Feeding before the ground freezes, but after the lawn no longer needs mowing, will give your lawn the extra nutrients it needs during our long, cold winters.
Look for a fertilizer with higher nitrogen and potassium, the first and last numbers on the bag. These are the nutrients that help promote a stronger root structure, disease resistance and hardiness in cold weather. A properly fed lawn produces a deeper root structure, capable of reaching water deep in the soil.
Here are some tips to help you put your lawn to bed for the winter:
Review your options at a lawn and garden centre by reading the bag. Look for higher nitrogen (N) and potassium (P) ratios.
Use a quality lawn fertilizer spreader or handheld model to ensure even feeding.
Don’t apply if heavy rain is expected, and ensure the last application is on before the ground is frozen.
Fertilizer can only do its job if it’s on your lawn or garden. Sweep any fertilizer that lands on sidewalks or driveways back onto the lawn, avoiding sewers and waterways.
Q: My wife and I are considering buying a cottage. With summer behind us, should we wait until next summer or should we start the search now?
A: There's no time like the present to start your search for the perfect cottage. Sure, property hunting in the fall foliage with a pumpkin-spiced latte in hand sounds heavenly, but there are some hard-and-fast facts to support this strategy, too.
If you wait until fall to start looking for your dream cabin or cottage, you’re more likely to find it. Families who have been thinking about selling for a while have enjoyed “one last summer” at the cottage before putting it on the market, so chances are there are more options for a buyer at the end of the season. When it comes to cottage hunting, sometimes the early birds do not catch the worm.
End-of-season sellers are likely to be more motivated to unload a summer cabin so they don’t have to carry the costs (i.e. second mortgage payments, maintenance, repairs and security costs) right through winter. Yes, this means you’ll have to take care of those yourself, but it will be for a property you actually want, not just what was available at the time.
With the leaves on the trees changing colour and falling, autumn is the optimal time to take a peek at how exposed a potential property is when the foliage isn’t there to protect it anymore. Look at it from the lake, look at it from the driveway, and look at it from the neighbours’ point of view to see how much privacy you’re really going to get throughout the year. Are someone else’s trees protecting you from prying eyes? Will you need to put in a privacy fence or plant a hedge? It’s good to have an idea of this type of investment before putting in that offer.
The summer was long and hot and has taken its toll on evaporated lake levels. If you wait until fall to see the shoreline of a property you’ve had your eye on, you’ll get a better idea of what the beach looks like when the water is at its lowest. Also, many cottages rely on lake reservoirs for their drinking water, so knowing whether getting potable water at the end of the summer will be an issue that is important—especially if you want it to be a rental income property. Having running water, reliable electricity and a decent driveway are three musts.
If you’re looking for a cabin that’s going to be a four-season property, you need to see it in a non-summer season. That warm mid-July sunshine can make anything look good, but how does your potential dream cottage hold when faced with dark clouds and relentless drizzle? Does the driveway turn to mud? Can you feel the damp coming through the windows? Does the wind off the lake cut right through the walls? Spending some time in the house and walking the property perimeter in bad weather shows you what you’ll need to deal with.
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