While most immigrants rent for the first year or so in order to get to know their new city, they usually have the goal of owning a home, which is a better financial decision for the long term.
Over the course of 25 years (usual amortization period for many homebuyers), the total amount of money paid by many renters can actually exceed the amount paid by a home owner. This is due not only to the fact that mortgage payments can be cheaper than rent, but because rental fees generally increase over the long term. Interest rates may also rise, but so will the value of the property. Therefore, additional equity can be gained.
The reality is that after the mortgage has been paid off, homeowners no longer make monthly mortgage payments, while renters continue to bear the burden for the rest of their lives. These savings can greatly impact one’s quality of life upon retirement.
The fact remains that money spent on rent is still money down the drain.
But committing to a house too soon could be a bad decision. Make sure you’re happy with your city and neighbourhood before committing to home ownership.
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