Planning for a mortgage

Purchasing a home is one of the most important decisions of your lifetime. It is easy to become overwhelmed at the idea of finding, purchasing and finally owning your own home. You may feel that you are comfortable renting. Following are some good reasons why owning a home can be one of the best investments in your future you will ever make. Instead of paying someone else’s mortgage, you can build equity in your own future.

It will bring a level of comfort that they will see no payment interruptions during a term. So, what do you do if you are self-employed or earn money in a way that you cannot always show conventionally? You need equity! Generally, you will require 25% equity in your home to qualify under a Canadian B lender, but some programs will enable clients to borrow up to 80% of their home’s value.

The freedom of owning your home cannot compare to the restrictions that renter’s experience. You can paint the walls any colour you like, hammer a nail in any wall, decorate a nursery, landscape the yard, anything you like!

Homeowners are different from renters. When you live in a neighbourhood or complex that is primarily owner-occupied, your neighbours, like you, have invested in and care about their property. Naturally, they are willing to invest time and money and effort to improve their property and community, which in turn, improved the value of your property.

Over time rents tend to rise. If you have a fixed-rate mortgage, your payments of principal and interest remain the same. Imagine how much rent might be in ten, fifteen, or even thirty years from now? Which makes more sense?

Rental payments are gone once you have made them. But, with each mortgage payment, you are buying something tangible, building up equity in your home. The longer you own the home typically the larger your equity.

A home is an investment that helps you keep up with inflation. Real estate has historically kept pace with and usually appreciates faster than the rate of inflation.

As long as you make your mortgage payments on time, you can live in your home for as long as you wish. Your landlord will not have control over the sale of your home.

Unlike rent which goes on forever, the mortgage on your home will be paid someday, providing you with rent-free living for your retirement.

When you purchase your home, you are leveraging your money. With as little as 5% down, you can acquire 100% ownership, a great return on your investment.

A renter typically gets no financial benefit from any of the improvements they make on the property, either to the home or yard. But as a homeowner, you can realize some or even all of the costs (and maybe even a profit) from improvements when you sell your home.

Even if your first home isn’t your dream home, you will be working your way up to it. With appreciation and the possibility of a return on your improvements, it may provide you with enough equity to make a down payment on your dream home later.

For some, second single-family homes or condominiums are proving to be good income investments and tax shelters. You will be realizing profits and tax benefits from renters who may not know the benefits of owning a home.

Both indoors and outdoors, you will probably have more space if you own your own home. Even moving to a condominium from an apartment, you are likely to find you have much more room available – your own laundry and storage area and bigger rooms. Apartment complexes are more interested in creating the maximum number of income-producing units than they are in creating space for each of the tenants.

Some people are just not good at saving money and a house is an automatic savings account. You accumulate savings in two ways. Every month, a portion of your payment goes toward the principal. Admittedly, in the early years of the mortgage, this is not much. Over time, however, it accelerates. Second, your home appreciates. Average appreciation on a home is approximately five percent, though it will vary from year to year, and in some years may even depreciate. Over time, history has shown that owning a home is one of the very best financial investments.