With fluctuating interest rates and rising rental prices, you might be wondering whether to renew your lease or take the plunge into homeownership.
With fluctuating interest rates and rising rental prices, you might be wondering whether to renew your lease or take the plunge into homeownership.
— What if I bought?
It's a question that comes up more and more often. Buying a condo or a house to own your primary residence can be a big leap. Depending on your situation, it might be the right time.
Please note: this article does not cover buying a multi-unit building (plex) for those who want to become landlords.
Buying a primary residence means owning a tangible asset where you can live for years and building wealth you can pass on later. A mortgage is demanding, but it's also a rewarding discipline. Each payment brings you closer to a concrete goal: increasing your net worth. A mortgage is a form of forced savings. Unlike rent, mortgage payments help grow your net worth every time you make one. Over time, your home generally gains value tax-free and offers other fiscal advantages. If you're a first-time buyer, you may qualify for provincial and federal tax credits.
People often say the difference between rent and homeownership costs could be invested to generate returns. These investments can also grow tax-free (for example, in a TFSA or FHSA) and require less maintenance and fewer expenses than a property. According to Finance et Investissement (article in French only), historical data even shows that some investments can potentially outperform real estate over time.
That said, it can be more tempting to spend than save when you're not obligated. Investments can be appealing if your priority is flexibility rather than a fixed address. Meanwhile, a primary residence isn't just financial security—it provides shelter and services that investments can't.
Homeownership offers residential stability. You know where you'll live for years, even decades, and you're protected from rent increases and non-renewal notices. A primary residence anchors you in your community.
Renting offers flexibility to change your mind. Need to switch jobs? You can move more easily and quickly. If your personal situation is uncertain, rental flexibility can be a major advantage.
As a homeowner, you can design your spaces as you like. You're free to personalize your home—if you have the time and/or money. A new property will be under warranty and up to date, while a resale property might require modifications or major renovations.
And what if access to homeownership became access to co-ownership? The range of condos on the market is diverse and can provide access to shared services in exchange for condo fees and a sufficient contingency fund. This way, we improve our comfort and have more time to focus on other projects.
On the other hand, if you want shared amenities without committing to a mortgage, many rental projects offer new spaces with vibrant tenant communities. Whether the unit is new or not, as a tenant you move into a ready-to-live space from day one, without major decisions about layout.
Buying a home isn't like signing a lease—it's a commitment. If you change your mind too quickly, your financial investment may not pay off. You need to think about resale, appreciation, and your personal and professional stability.
Have you heard of the "financial prison" trap—a house that's too big, too expensive, too demanding in maintenance and costs? With the right approach, you can buy and still keep budget flexibility. Start by assessing your finances.
In Canada, the Canada Mortgage and Housing Corporation (CMHC) has clear criteria to avoid over-lending. It recommends two debt limits when buying: a maximum of 39% of gross annual income for housing costs (gross debt service ratio, GDS) and a maximum of 44% for housing plus all other personal debts (total debt service ratio, TDS).
Is your credit score strong enough? Do you have the funds for a down payment? The minimum is 5% for properties up to $500,000 and 10% for the portion above $500,000, up to $1.5 million. Perhaps you have the opportunity to benefit from a gift or an interest-free loan from a parent or a loved one to help you increase your down payment (known as "love money"). Also, are you ready to cover taxes, insurance, and unexpected costs? These are key questions before buying.
The Home Buyers' Plan (HBP) lets you withdraw up to $60,000 from your RRSP to buy your first home. The Fonds de solidarité FTQ's Saving Services team can guide you to maximize this opportunity.
Depending on your situation, becoming a first-time buyer might be a dream within reach. But like any financial decision, it deserves careful thought. Use the AMF calculator to assess your financial capacity.
Are your loved ones thinking about selling their home in retirement? Check out our article "Buy or rent: in retirement, should I sell my house to become a tenant?".
Did you know the Fonds immobilier de solidarité FTQ invests in residential projects for condos to buy and apartments to rent?
Planning to stay a tenant for a while? Renting can also offer advantages, especially when it comes to planning your retirement savings. There are many ways to build financial security without owning property. Unsure how to save? Our Saving Savvy course is here to help you understand personal finance and save according to your reality.
