Select Page

Housing Strategy

Shelter is one of the most basic human needs, and most of us want to live in a nice place. However, depending on where in the country you live, the amount of house your money will afford can vary greatly. We also live in a society that generally views home ownership as a central pillar of any good life. While owning your home can make great sense in many situations, we’re here to tell you that it is not the only option, nor is it always the best one.

Here are three key points we believe you should consider when it comes to home ownership:

1. In many cities and at many stages of life, especially younger ones, renting can make more sense than buying. With house and condo prices ballooning out of control in cities like Vancouver and Toronto, buying a house has become simply impossible for many people. However, even in most other major cities in Canada, the tradeoff between renting and buying when you are younger simply doesn’t make sense in our opinion. Renting gives you much greater flexibility and mobility in your life, brings far less hassle than ownership and often is downright cheaper than buying, and that is ok. Many young people would be far better off to rent for a few years and build up their savings so when the time does come to buy, there is that money there to use as a down payment.

2. If you are thinking of buying, don’t make yourself mortgage poor by buying more than you can truly afford. In an effort to protect buyers from themselves, the Canadian Government has recently beefed up the rules around mortgage insurance qualifications to ensure that buyers can handle as much as a 2% increase in mortgage rates. However, many people can still be approved for more mortgage than they really need. Aim to keep your total living costs (mortgage, property taxes, insurance, utilities) under 30% of your income, and you won’t to live like a pauper to afford your mortgage payments.

3. If you currently have a mortgage and pay monthly, switch to weekly or accelerated weekly payments to pay it off faster. A typical mortgage is amortized over 25 years, that being the period that it will take you to completely pay off the mortgage. However, if you begin paying weekly instead of monthly, you can often knock years off of the mortgage, saving you thousands of dollars in interest. A weekly payment is calculated by dividing your monthly payment by four. However, there are 52 weeks in a year, not 48 (12×4), so you end up making essentially an extra months payment every year. It’s simple math, but it can have a huge impact.

Similar to other areas of your finances, when it comes to owning or renting, every situation is unique, and we strongly recommend you do what you want to do! And if that means delaying owning in favour of greater savings and flexibility in the short term, that is totally ok!

If you’d like some additional support with making a change, please setup an initial connection meeting with us and learn more about how Finovo can help you get better control of your finances.

#Finovo #ExtraordinaryLife