I met with a new arrival in Vancouver this week and one of the things we discussed was the whole issue of whether it is better to rent or buy.
I strongly believe that there is no single answer to this question as so much is down to your personal circumstances. So instead, here’s some questions to ask yourself that will help you make this decision for yourself.
1. Can I get financing?
This is the first question for a reason. If the answer is NO, then there’s no need to even think about any of the other questions!
Financing is available when you first arrive in Canada, despite your not having a credit rating here, IF you have enough money to put down on the property. That is generally 35% or more. And that can be a large chunk of change.
If you are newly arrived and have a job already, then your financing may be available with a smaller down payment. You will need to have passed your probation in your job.
My advice is to contact a mortgage broker (like ours: Keith Baker) because then you will have access to a wide range of financial institutions. There’s no charge for this and you’ll get advice that’s specific to you.
2. Do I know where I want to live?
This is a pretty basic question and one that every immigrant should ask quite carefully. Let’s face it there’s no point in buying a lovely home in an area that you sooner or later find is not one that suits you.
If you’ve done really good research and been over here enough to know what area is right for you, then buying is worth considering.
If not, then you’re probably still in the research phase of your move – even if you’ve landed. Now’s the time to rent for a while and check out whether what you think is the right area is really so in practice.
3. How long am I going to be here?
Real estate is a long term investment especially when it is your family home. If you aren’t sure how long you will be in the area, then renting might be better for you. Buying and then selling within a short time can be ok, but only when the market is active and moving up. When it is slow or the prices are going down then you might lose out.
4. What about schools?
Getting your child into a specific school can be a factor. Most schools have catchment areas and your challenge might be in finding a rental property in the right area for the school you want. And once you’ve found one there’s a possibility that your lease will not be renewed at the end of the year and you’ll be looking for another suitable place.
Buying somewhere to be in the right catchment area is a familiar tactic all over the world. In Canada it happens too. You would need to be certain that you want the school and are prepared to live in the area for the time your child is in that school. If so then buying is for you.
5. How do I feel about renting?
So far, if you’ve been following along, you’ve been asking practical questions. This one is all about your own thinking and gut feeling about renting or buying.
Some people just object to renting at all. They’re the ones who see rent as “dead money” or talk about “paying someone else’s mortgage”. Depending on how strongly you agree with this, you might be buying even if some of the other practical factors suggest renting is better.
Another psychological factor that often plays is “wanting to get settled”. Immigrating is a stressful process and for most of us, we are in limbo whilst waiting for the visas to come and the move to happen. That leads to a feeling of being unsettled that is uncomfortable. Buying a home and finally unpacking all your belongings is very appealing.
On the other hand, you might be someone who is happy to have no mortgage and to be flexible enough to move around. Perhaps coming to Canada was your chance to be freer and you wanted to move around and explore the country. Renting is for you! (Or maybe an RV?)