Recent trends have shown a dramatic rise in Toronto’s real estate market. And as housing demands continue to skyrocket across the country, an important question lingers on the minds of many—is buying a home really worth it?
Deciding between buying and renting a home is a big decision. Everyone has unique circumstances and visions for where they see themselves in a few years, so what works for one may not work for another.
And while there is no universal answer—the best strategy for deciding is to learn the key differences between buying vs renting a home. Let’s take a closer look at the pros and cons of each so you can figure out what works best for you.
The Difference Between Buying vs Renting
What does it mean to buy a home?
Buying a home is a long-term commitment. It involves finding a property, getting approved for a mortgage (financing), putting in an offer to purchase, saving money for the down payment, and closing the sale.
While the home is considered yours, it’s essentially owned by the bank or mortgage lender until the mortgage has been paid in full. All the upkeep and expenses that come with owning the home become your responsibility. You have the final say in any renovations or additions you choose to make to your home.
What does it mean to rent a home?
- How much your monthly rent is
- When it needs to be paid
- How long you’ll be renting for (most leases have a 1-year term)
- The amount of your security/damage deposit
- The rules and conditions for living in the home
- Any additional costs or utilities you must pay
Any upkeep on the home is usually the landlord’s responsibility and you most likely won’t have any decision-making authority when it comes to renovations or major changes to the house.
Buying vs Renting—the Pros and Cons
Pros of Buying
- Independence—you’ll have a place to call your own with no landlord to abide by
- Freedom—the possibilities of what you can do with the home are endless—your imagination is your biggest restriction
- Stability—you choose how long you want to stay in the home without the constant worry of being asked to leave
- Home equity and ownership
- Home appreciation—your property can increase in value over time as the national average appreciation rate is between 3-5% per year
- The value of your home will greatly appreciate when there’s high demand and low supply
- Lower interest rates may make buying a cheaper option than renting
- Use a portion of your payments as a tax deductible
- You can increase your property’s value by doing upgrades and improvements—making your house look more appealing to you and the market
- You can eventually pay off your mortgage and eliminate the biggest portion of your monthly payments
- Buying a home is one of the best long-term investments you’ll ever make
- You can sell your home and put the money towards something bigger/better
Cons of Buying
- There may be hidden costs you weren’t prepared for (always check with your realtor about the possibility of hidden fees)
- Long-term commitment—It’s much harder to just “up and leave” when you own a home
- There’s a lot more responsibility and possible liabilities
- Taxes and insurance costs tend to rise over the years
- The risk of depreciation over time
- You need a ton of money upfront for a down payment
- Not everyone gets approved for a mortgage
- All the expenses are yours—mortgage payments, property taxes, insurance, utilities, breakdowns, repairs, renovations, yard care, etc
- The expense of owning a home can lead to other financial sacrifices (trips, vehicles, etc)
Pros of Renting
- Flexibility—you can move without penalty at the end of your lease
- Freedom—less responsibility and maintenance
- Fewer utility bills (if any)
- Renter’s insurance is significantly cheaper than home insurance
- Fewer expenses means you might be able to save more money
- Less overall stress—if something breaks, it’s the landlord’s or caretaker’s problem
- No down payment to save for (other than a deposit, which is usually only a couple of months’ rent)
- No risk of depreciation
Cons of Renting
- You may have to move unexpectedly if your landlord sells the property or ends the lease
- Your rent could bump up to something more than you can afford
- You won’t gain anything besides life experience and memories when your lease ends (except for maybe some saved cash—no equity, no ownership, no house to pass down or keep in the family)
- You have to live by someone else’s rules (no pets, no remodelling, no loud noise, etc)
- You can never pay off your rent like you can a mortgage
- No tax benefits
- Rent payments may end up costing more than a mortgage payment would
The Bottom Line
When it comes down to choosing between buying or renting a home, there is no easy answer. There are many reasons, good and bad, for both buying and renting a home. Only you can decide what works best for you, your goals, and your financial situation.
Buying a house is a huge investment that adds a lot of responsibility to your plate.
Are you prepared for everything that comes with owning a home?
Do you want to settle down and live somewhere for an extended time?
Are you financially ready to make the commitment?
How much does it matter to you to call your house your own?
The way you answer those questions will determine whether buying a home is the better option for you.
Are you still on the fence about all the responsibility, maintenance, and upkeep that comes with owning a home? Do you have enough money saved for a down payment? Will the monthly expenses of owning a home leave you house poor? Or maybe you’re just not sure about the long-term commitment?
If any of these questions leave you feeling unsettled, there’s nothing wrong with renting for another year or two. The last thing you want to do is rush into a decision that you weren’t well prepared for.
Whatever you decide, I’m here to help you make the right choice. Get in touch with me today if you’re interested in exploring your options.
Hi, I’m Joel, a real estate professional based in Toronto.
My approach is simple—I put you first. I believe in open communication, total transparency, and meaningful results. I’ll guide you through the real estate process, market values, and always keep the focus on you—and your needs.