22 Mar 2018

Is home ownership the only way to go?

From Jesse Mulligan, 1–4pm, 2:28 pm on 22 March 2018

Discouraged renters who feel they may never save enough to own their own home should consider making the most of being a tenant for life, or at least until retirement, says personal finance expert Mary Holm.

For rent sign inside ruler in shape of house, with high rise building in background.

Photo: 123RF

To make it work, renters need to save lots of money to cover their rent in retirement or to buy a house at that time.

But they can afford to, she says, because their accommodation expenses are lower than their home-buying counterparts.

By saving what they would have otherwise spent on mortgage, rates, maintenance and insurance minus rent, Mary says renters might come out as well or better off than their home-buying friends, she says.

The advantages of renting:

Better savings diversification

Less responsibility

No need to do (or pay someone else to do) maintenance

May be easier to live close to downtown

Can move easily and cheaply

Can use long-term savings for a business or other investment

The disadvantages of renting:  

Can be kicked out - especially bad if you have children

No choice of decorations and garden etc

Can't build value in your home through gardening and DIY improvements

Less security in retirement

No house for kids to inherit

And then there are psychological factors, she says. Home owners have pride in their ownership of home and are in control of a very important aspect of living – but they can’t walk away from responsibilities tied to home ownership.

Listen to all of Mary Holm's podcasts here.

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