Experts are continually weighing in on the age-old debate of whether it makes more sense for Canadians to buy or rent your home. While buying a home in many parts of the country is a tall order, if you can afford it, you’ll be better off financially compared to renting, says a new report.


The report by noted housing analyst Will Dunning, sponsored by Royal LePage, looked at 278 scenarios and assumed a buyer had a 20% down payment. It measured the net cost of ownership (total cost of ownership minus the portion of mortgage payment that goes toward principal) and found that buying was financially beneficial 91% of the time.


On the one hand, owning comes with more responsibility and higher monthly expenses, but offers greater stability and a long-term investment. On the flip side, the money spent on renting will never be recuperated, although it can offer some flexibility if you’re not sure how long you’ll live in one place.


Mortgage payments go towards both principal (the amount owing on the loan) and interest (the amount of interest charged based on the outstanding loan amount). The effect of making these regular payments is more profound the longer you own a home because interest is the largest component in the first year and gradually decreases as the mortgage is paid down.


While Canadians want their homes to appreciate, potential homebuyers will find it reassuring that significant price appreciation isn’t necessary for ownership to be financially worthwhile. Historically, homeownership has been very profitable for Canadians, many of whom factor real estate investments into retirement planning. Owning a home is widely viewed as a means to save money and build equity. 


Thinking of buying a new home and have questions about your options? Answers are a call or click away!