Is homeownership for you? You need to look at much more than the cost of rent or a mortgageMortgage A loan that you get to pay for a home or other property. Often the loan is for 20 years or more. You make a set number of payments for a set amount each year.+ read full definition payment to know for sure.
A quick comparison
|Costs||Likely lower monthly costs
Fixed monthly costs
Pay a deposit of a month’s rent
May pay a deposit for damages
|Likely higher monthly costs with mortgage, property taxes, utilities, maintenance, furnishing and decorating
Pay interest to the bank on mortgage
Possible unexpected repair costs
|Investment potential||Rent money goes to your landlord||Build equity as you pay off mortgage|
|Income potential||May be able to create income by renting out rooms or subletting||Can create income by renting out or borrowing against your home|
|Maintenance||Not responsible for maintenance, but dependent on landlord to make timely repairs||Responsible for maintenance and repairs|
|Commute||Higher rents in prime areas but you save time and money on commute||Affordable houses in suburban areas mean you spend more time and money on commute|
|Flexibility to move||Can move out almost whenever you want||Harder to move quickly as can take time to sell
May face a mortgage penalty
4 questions to ask yourself
- What kind of housing are you looking for?
- How much can you afford?
- How soon do you think you’ll move again?
- How important is home ownership for you?