Owning Or Renting Your Home - Which One Makes Sense For You?

According to an RBC Royal Bank study conducted by Ipsos-Reid in January 2006

, 90 per cent of Canadians view their home as a good investment. For those intending to buy a home in the next five years, detached houses are preferred most by those between age 25 to 54, while age 18 to 24 and 55-plus are the most likely to prefer King West Condos. Strictly from a cash flow standpoint, renting can appear less costly than owning, without the additional costs of house taxes, maintenance and utilities, but unlike renting, home ownership is a form of investment.

Here are some common concerns of those new to the housing market, and some answers that may pleasantly surprise you:

"I'll never save enough money to make a down payment."

You don't necessarily have to.With interest rates creeping up, many first-time homebuyers want to get into the market right away but haven't been able to save the five per cent down payment.A 'no down payment mortgage' can allow you to borrow 95 per cent of the appraised property value or purchase price of your new home - whichever is less.This innovative solution provides five per cent cash back when you take a five-year fixed-rate mortgage - funds you can use to cover the required five per cent down payment.All you need is 1.5 per cent of the purchase price to cover closing costs (including: lawyer fees, movers, and land transfer tax.)

"Most of my savings are already tied up in RRSPs"

As a first-time homebuyer, you can actually borrow up to $20,000 from your RRSP (up to $40,000 per couple) to help buy, or build a qualifying first home.You can repay your RRSP in annual installments over 15 years.Contact your local taxation office or bank branch for full details on this helpful Home Buyer's Plan sponsored by the federal government.

"What about all the extra costs of buying a home?"

Toronto Lofts for sale before you start looking for your Dream Home, contact a Mortgage Broker for free expert advice and to arrange pre-approval for your mortgage.

A pre-approved mortgage lets you know, up front, what you can realistically afford to pay for a home in terms of purchase price, down payment, legal fees and other closing expenses.You will know exactly how much you can borrow based on your current financial situation, subject to a formal credit approval and satisfactory property appraisal.And by getting your mortgage pre-approved, your interest rate is guaranteed for 90 to 120 days.The benefit of this lock-in feature is that if interest rates increase while you are house hunting, you are guaranteed the locked in rate, and if the interest rates decrease, you are now eligible for the lower rate!

Choose a mortgage lender that offers the flexibility to adapt to changing situations.Discuss the option of skipping mortgage payments during a tight period, or increasing or paying down your mortgage as your priorities change.There are many options now when buying your home in terms of mortgage pre-payment privileges, hybrid mortgages, and mortgage portability.Consult with your mortgage broker, or the mortgage consultant at your bank branch.

by: Andrew Brunner

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