If you're thinking its time to buy your own place, there is lots to consider. From either prospective, there are pros and cons, and certainly WINK PROPERTIES & REALTY can assist with both. For a comprehensive monthly comparison of leasing vs owing, CURRENT MARKET CONDITIONS and MORTGAGE RATES, contact us (link here) for an analysis. Ultimately you decide what you are best suited for!
Leasing
You pay a fixed monthly rent, which typically includes:
- The cost of construction for your residence
- The bulk of any maintenance of your residence and building
- Municipal realty taxes
- Water consumption & sewer fees
- Exterior building insurance and structure
- Snow removal and landscaping
- Sometimes additional utilities are included in rent such as heat, hydro or both
- Pest removal (**except in cases of the resident being the cause)
Leasing is very simple, cost effective, problem free and can be maintained as long as you wish, for as long as payments are maintained.
Owning
Ownership has its privileges, however, they do come at significant cost and responsibility. These are not meant to deter anyone from pursuing this goal, however, below offer realistic scenarios that every person should be prepared for. Some expenses and responsibilities of homeownership to consider before taking the plunge (variations exist between condominiums, semi-detached, detached properties & Co-Ops):
- Downpayment - you need to save minimally 5% of the value of a purchase as a downpayment for a personal residence. The more you can save, the less underwriting insurance and lender fees will be, the less stringent the application process will also be.
- Closing Costs - Thanks to the LIBERAL PROVINCIAL GOVERNMENT, with the introduction of the HST, these closing costs just became more expensive. Items such as Lawyer, Inspection, & Contractor Fees, are all now subject to 13% tax instead of 5% GST.
Land transfer tax, paid for by the buyer has always been another big expense and continues to be on closing - simply another tax grab only to place your name on title. In addition to your minimum saved downpayment, you should allow for approximately 2-2.25% of the purchase price as expenses that need to be paid on or before closing. Total investment so far is approx. 7.25% of the purchase price.
- Utilities - You will be responsible for all utilities (heat , hydro, water, sewer, cable, phone & internet) unless you are purchasing a condo, in which case, some of the above MAY be covered in monthly condo fees. Because of increasing cost, generally even condos, are offering much less in the way of utilities. Again, because of the LIBERAL PROVINCIAL GOVERNMENT, all utilities are now subject to a much higher 13% HST, instead of the previous 5% GST. If you have never before had a utility account in your name, be prepared to put down a significant security deposit or approximately the equivalent of (3) months worth of consumption.
- Repairs & Maintenance - Plumbing, electrical, structural, millwork, cabinetry, flooring, landscaping, heating, roofing, foundation and appliances are just some of the things that can and will go wrong in a home. When its your own place, its also all your expense. This is where people find our very quickly that labour & materials add up very quickly and and are not cheap. Co-ordinating repairs is also an art. Previously these repairs were less taxed with the GST - they are all now taxed at 13% HST.
- Capitol Cost Items - Major costs of a property when they are at the end of their functional life and have to be replaced, remediated or repaired: Roof,Windows & Doors, Basement Leaks, Furnace/Boiler, Central Air, Concrete, Brickwork and Driveway, Electrical Panel and Wiring, Plumbing.
- Mortgage/Taxes/Insurance - In addition to the capitol cost items and maintenance mentioned above, your largest expenses in home ownership come in the form of: mortgage payments, property municipal taxes and insurance coverage. These vary significantly depending on product type, location and inclusions.
- Banking - As each term of the mortgage matures along the amortization period, (anywhere between 6 months to 10 years), things like change in employment, credit and payment history all play a factor in whether the lender will offer a further renewal or demand the loan. If the latter occurs, you would be forced to re-apply and re-qualify elsewhere. Usually however, once you qualify, and keep your account to current and in good standing, you will not have any problems.
Phone: 905.572.WINK (9465) | Toll Free: 877.WINK INC (946.5462)
E-mail: [email protected]
Website: www.winkproperties.ca