Are you currently renting in the Greater Toronto Area (GTA) and wondering if homeownership is the right move for you? Many renters hesitate to take the leap due to high home prices, but does owning actually make better financial sense in the long run? Let’s break it down in simple terms using two scenarios: Buying with 10% down vs. Renting and Buying with 20% down vs. Renting over a 5-year period.
Important: *The figures presented in this analysis are for informational purposes only and are based on estimated market conditions. Actual costs may vary depending on interest rates, property values, taxes, and other factors. Please consult with a qualified real estate or financial professional for personalized advice tailored to your situation.* Please also checkout my post about the Pros and Cons of Buying Vs Renting.
If you’re renting a one-bedroom apartment in the GTA, you’re likely paying around $2,424 per month (based on Q4 2024 TRREB Rental Market Report). But rent typically increases each year due to inflation,for rental units with no rent control, increase maybe greater than the guideline posted, visit Ontario.ca for more info. Assuming a 2% annual rent increase, here’s what happens over 5 years:
That’s over $150,000 spent on housing with no return on investment. Now, let’s see what happens if you buy instead.
Use the calculators on Realtor.ca, a trusted tool to help estimate your payments, affordability and plan your home purchase.
For those looking to buy with a 10% down payment as First Home Buyers, let’s assume the average starter condo price is $674,100(Bench Mark Price for Toronto Apartment). After adding CMHC insurance (required for down payments under 20%), the total mortgage amount is around $625,497. Click here to use calculators on Realtor.ca
Key takeaway: Even with a smaller down payment and CMHC insurance, homeowners in this scenario end up ahead by over $16,000 due to equity growth.
Now, let’s see how things change if you put 20% down ($134,820) to avoid CMHC insurance.
Key takeaway: A larger down payment reduces mortgage costs and helps you build equity faster, leaving you over $35,000 ahead compared to just renting.
If you continue renting, you’ll spend over $150,000 on rent in the next 5 years without building any wealth.
If you buy, even with a 10% down payment, you’ll build equity and potentially come out ahead financially. With 20% down, the financial benefits are even greater, giving you more stability and long-term savings.
🏠 Buying with 10% down: More upfront costs but builds equity, leaving you ahead by ~$16,096. 🏡 Buying with 20% down: Lower total costs, faster equity growth, and a net gain of ~$35,003. 🚪 Renting: ~$151,375 spent with $0 equity built.
While homeownership requires financial planning, it’s clear that over time, buying in the GTA allows you to turn housing costs into an investment rather than an expense.
Thinking about making the switch from renting to owning? Let’s discuss your options!
Have feedback or questions? Please drop an email to Opel Ou, Real Estate Broker: opel@opelou.com
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