The feeling and satisfaction of home ownership is the number one reason why Canadians desire their own home. There is no landlord looking over your shoulder. You are able to make home improvements knowing that any appreciation that results will be to your benefit. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.
1. Homeownership builds wealth over time
While home prices move in cycles over the short-term, if you stay in your home for a long time, it could increase in value and give you a substantial return on your investment. This is called "capital gain."
2. You build equity every month
When you subtract the amount you owe on your home loan from the total value of your house, the amount left over is your home equity - the “dollar” value of your home that actually belongs to you. There are two ways to build equity:
- With each monthly mortgage payment you make, a portion goes toward reducing the amount you owe on your loan, which increases your equity. In a sense, paying your mortgage is a form of savings, as it increases the equity in your home.
- As your home increases in the value, it creates more equity for you
In a sense, paying your mortgage is a form of savings, since it increases your home equity which you can tap into if you need money in the future.
When necessary, you can borrow against your home equity to meet a variety of financial needs, including home improvements, education or medical expenses. A home equity loan or line of credit can also be used to pay off high interest credit card debt, since the interest rate is generally lower and the interest payments are tax deductible.
3. Long-term, buying is cheaper than renting
In the first few years, it may be cheaper to rent. Over time, the interest portion of your mortgage payment will decrease and the interest that you pay will eventually be lower than the rent you would have been paying. More importantly, you are not throwing away all that money on rent. You have to live somewhere, so instead of paying off your landlord's home or building, pay off your own.
4. You Build a Strong Credit History
When you buy a home and consistently make your monthly loan payments on time, it demonstrates to other lenders that you are a good borrower and the risk of you defaulting on a loan is low. This strong credit history will be helpful in the future when you need other loans for buying a car, making improvements to your home, or paying other major expenses.
5. You’re Free to Create the Home You Want
Homeownership offers tremendous freedom to create the living environment that you have always wanted. You can own pets, paint rooms whatever color you like, make changes to floors and carpeting and do all the things that make a house your home – all without having to get approval from a landlord.
In Canada, especially in the last few years, homes have appreciated ocnsiderably and in doing so, have added sustainability to owner's net worth. Unlike stocks and bonds, you get to live in your real estate investment. Also, in Canada, your principal residence is exempt from capital gain taxes.