There are advantages and disadvantages to owning your own home. Which is best for you? That depends on your current and future plans. This guide presents the pros and cons for buying.
Advantages to Buying
- Customization – You can choose to what colors to paint, what renovations to make, and you can make your home more energy efficient. The possibilities are endless without having to ask a landlord. You’ll also not have to wait on a landlord to fix appliances or other problems with the home.
- Forced Savings – By paying your mortgage, you are building equity in your home. After time, the mortgage is paid down and there is a good chance that you’ll be able to either sell it at a profit or use it to leverage other investments.
- Income Source – Your home can help make you money. Renting out a bedroom/basement suite/guest house is a great revenue source. In crowded cities, offering a parking space or garden for rent can also provide a secondary income.
- Tax Benefits – In a primary residence, deducting mortgage interest is the main tax benefit. Other deductions may be available for specific situations (PMI, energy efficiency, etc). Consult a tax professional for more information as well as tax benefits for investment properties as they can be extensive.
- Stability – No landlord can kick you out. If you’ve chosen a fixed rate mortgage, your monthly payment should not increase (unless property taxes increase, which is typically a small change).
Disadvantages to Buying
- Illiquidity – When buying a home, your money is tied up and cannot be quickly and easily made available.
- Repairs – You are responsible for financing all repairs on your home, large and small.
- Mobility – It’s much harder to pick up and leave when living in a home.
- Value – The value of your home may not increase in the first few years.