Why We Rent

I’ve been reading a lot lately about budgeting, personal finance and the age old rent versus buy conundrum.

I’m going to tell you why I’m renting and why that makes a lot of sense for me. When you consider renting or buying a home, there’s a lot of things to consider, and once you consider them it becomes clear to you, what the best decision is for you….not what’s best in general. I have found it to be intensely personal, and I have found that for now we are proud renters!

Here’s why:

We don’t have a down payment. Not any at all. And we have decided that we will have a 20% down payment before we buy. This will save us well over a year’s rent on CMHC buyers insurance as well as make sure our mortgage term isn’t obscene. In fact we expect to save hard as long as we can and not buy until we have a hefty down payment because interest makes me feel nuts and I want to avoid it as much as I can. Over a 25 year amortization an extra $100/month on your mortgage can save your years on your mortgage and tens of thousands of dollars. I am obsessive about frugal living and budgeting and having a mortgage generating 100% interest (with a loan on little down payment) will make me nuts, reducing quality for life for me all those near me. The amoubnt of interest on a mortgage ismortifying to me. We probbaly shouldn't buy a house until it's not so mortifying a thought.

We can’t/won’t buy where we live now. We’re not sure if we’re going to stay up here, maybe we will, maybe we won’t. The types of homes we are attracted to exist here but mostly 15-20 minutes outside of town, and we really, really dislike commuting. We both know that we are less likely to do something fun if we have to drive there. I hate winter driving and love riding my bike to work. Buying in town would be a huge compromise on our lifestyle. Plus we love where we are now with the view etc.

When we buy a house we will probably get one bigger than the apartment we are currently renting. Up here heating your home is not for the faint of heart. Heating, maintaining etc. a house is much more than we currently spend. Plus houses here are expensive to boot, so renting is cheaper. This works for us because YES we are saving the difference.

We are not savvy investors who play the market. While I will consider our future home an asset, I doubt I’ll consider it an investment, and if we buy now and pay for the house twice (once for the house, once in interest) I cannot imagine if the house will be worth 2X or better listing price at the end of a mortgage. Until we have a good down payment, the interest we’d pay over the long term would eat into this magical equity I hear so much about. It’s only equity if you can get more out of it than what you put in.

I like the flexibility of renting. We can move whenever we want, take advantage of cheaper rent, a job opportunity, whatever.

I really like having regular expenses to budget for. No big ticket items ever when you’re renting. No “saving for the roof” fund. This leaves me more time to dump money into RRSP. This will be great to help with the down payment as well, as we’ll be first time home buyers.

Renting suits us very well right now because we don’t actually want to own a house right now, and buying one would be financially oppressive and reduce our quality of life. I think we’ll keep renting until we can buy a house in a place we want to stay a while for sure, and have the savings to put a good dent in the down payment. I’m glad I did all this research because I was worried I was missing the boat and now I feel sure I am not. We like how things are now…and even though it’s normal to buy a house, rushing into a multi-hundred-thousand dollar purchase is right out of the question for a girl who spends long minutes evaluating the best value peanut butter.

Renters unite!