To Buy or Rent in Mississauga Math
What’s better in today’s market- To Buy or Rent in Mississauga?
To buy or rent in Mississauga often poses a big dilemma not only for newcomers, but for most first time buyers. While there is a definite feeling of freedom associated with renting, home ownership brings with it a great sense of accomplishment. More than that, the real estate market is moving at a very fast pace. The later you decide to enter it, the tougher it will be for many to afford a home or a condo.
To Buy or Rent – Young Professional Scenario
In 2014, a financial planner by profession, approached us upon securing his first job in Mississauga Square One area. He had a good income, an excellent credit score and he asked us to find him a rental condo.
His income and savings could qualify him to buy a condo for $250,000 (this was the price for a decent 1 BR condo in 2014 in Mississauga Square One area). Looking at his credentials, we suggested that he buy a condo instead of renting. He declined saying that he preferred to buy a property in Mississauga only after he had saved up enough over the next five years.
To buy or rent question can be so overwhelming that people miss the simple math towards home ownership.
Now this client had the ability to make a 5% down payment right away. Today, the same property sells around $350,000 (see square one condo prices). He lost some $100,000 in price appreciation alone. Plus, he also lost an opportunity to build equity by burning his mortgage down over this 3-year period. On top of this, he continued paying someone else’s mortgage.
As an experienced local Realtor team, we always present both sides of the coin to our clients. At the end, it is obviously their final choice and decision, but presenting all facts and making some sound recommendations is part of our job.
The point is that renting makes little sense when you have good credit and a well paying stable job.
Many tenants plan to save more before venturing into buying. Sure, it makes sense to pay more down payment when it comes to buying, as a smaller mortgage loan translates into lower monthly payments. But it might not make sense if property prices keep moving up faster than one can save. It is also very hard for most people to keep finances on track.
Sometimes other expenditures such as family holidays, shopping expenses or other luxuries eat into savings for a home and buying takes a back seat. This is the reason why some people stay tenants forever.
We all know that home ownership in Mississauga is fast becoming a distant dream even for well established or mature clients. Our Gen Y clients have been reaping the rewards of an early entry into real estate. Mississauga real estate is booming and prices have been appreciating steadily (despite the minor blip earlier this year which was expected after an unrealistic surge in prices).
However, many young adults are already finding it hard to afford a home or condo in Mississauga, let alone how difficult it will get in the future. Our advice to them is to get into the real estate market as soon as you can, whether with help from parents buying homes for their adult children, or jointly with a friend or sibling.
To Buy or Rent in Mississauga – Your Key Considerations
The above real life example should have helped you understand that you don’t have to keep saving for the right time to buy a home or a condo in Mississauga. The market is moving at a much faster pace than what you might be able to save over the course of next 3-5 years.
Also remember that your equity increases as your mortgage gets paid down. This equity represents the potential down payment for your next property. If you have saved enough down payment then buying a townhouse or a semi can also be possible.
Here is another good read on buying vs renting with a rent vs. buy calculator.
What are REALTOR® costs?
REALTORS® bring buyers great value, for free, well in most cases! Home buyers do not pay any commission in a real estate transaction in most cases. The seller usually pays real estate commission to the buyer’s brokerage through his/her listing brokerage, or sometimes directly to the buyer’s brokerage.
What government incentives are available for buyers?
Did you know that there are many government incentives and rebates for first time buyers in Ontario? These include:
- RRSP Home buyers plan
- Ontario Land transfer tax rebate for first time buyers
- HST rebate for new home buyers
- First time buyer tax credit
What is Team Kalia’s Rent Now – Buy Later Program
As part of this program we can assist you with finding a suitable property to rent for 1-2 years (max). Closer to the end of your lease term (or earlier depending on your readiness to purchase), we will start sending you for sale listings that closely match your needs. We will arrange for showings so that you can cherry pick the home or condo you would like to buy.
As a Buyer, when you Buy your home or condo with Team Kalia, you DO NOT pay us any fee or commission, as the Buyer Broker fee or commission is typically covered by the Seller in Canada.
What are the Rent Now-Buy Later Program Benefits
- Rent Now Buy Later can be an ideal for Newcomers, People on Work Permit, Millennial Home Buyers, First Time Home Buyers in Mississauga
- Gives you peace of mind – helps you secure a unit for rent in a typically tight rental market
- Gives you confidence – knowing that you will soon become a homeowner & contribute towards your own mortgage payment
- Allows you time to save for a down payment towards your home purchase
- Gives you time to figure out the best neighbourhood to buy in, based on your work, school & other criteria
- Makes you an informed buyer as we will educate you about mortgage, resale vs. builder new options, first time buyer incentives & much more.
If you think you are still thinking what is good for you- to buy or rent in Mississauga, book a FREE Home Buyer Consultation with our team at our Square One office. We will walk you through the basic home buying steps. And then we will also cover some other questions that might help clear your worries.