Spoiler alert: you won’t have a concrete answer about whether you should rent or buy, by the end of this article. Rather, you’ll have a few solid points to think about, and, depending on your answer, you’ll be able to make a decision about what’s best for you.
So, what are some things you should think about when deciding between renting and buying?
Saving for a down payment
The average price of a condo in Toronto is now about $579,000. If you were to purchase a condo for this price, your minimum down payment would be $32,900. With the average rent for a 1 bedroom apartment being $2,315, this means that you’d have paid $32,900 in rent in just over 14 months. Pretty crazy when you think about it like that, right?
For those with the option, living with family for a year or two is a feasible option to help save for a down payment. In fact, one-third of young adults in Toronto are living with their parents for this exact reason. Unfortunately, not everyone has the luxury of being able to live rent-free while they save to buy a place of their own.
So, point #1 to think about: How long will it take you to save enough for a down payment?
Monthly expenses of owning a condo in Toronto
The down payment is only the first part. Now that you’ve (hypothetically) managed that, it’s time to look at monthly expenses.
With your minimum down payment of $32,900, a 5-year fixed closed mortgage term, and an amortization period of 25 years, your monthly mortgage payment would be $2,610. Not much more than your rent would be, right? Well, you’ll also need to factor in condo fees.
Condo fees vary depending on your building and the size of your unit. Generally, they can cost from $0.50 to $1.00 or higher per square foot. Let’s say your condo fees cost around $450 a month; that brings your total up to $3,060.
What’s more, you’ll need to tack on another ~$150 for utilities, about $270 for property tax, and $50 for property insurance. In this scenario, that brings your monthly costs to a total of $3,530.
Point #2 to think about: Can you afford the monthly expenses of owning a condo? If the answer is yes, that doesn’t necessarily mean that you should. Let’s consider the pros and cons of owning a condo.
Pros and cons of buying
Have the freedom to do what you please with your home
Have peace of mind knowing that you have a place to call home
Locked into one location, unless you choose to sell or rent
More responsibility in terms of home upkeep
Higher monthly costs
There’s a lot to think about when it comes to purchasing a condo. Now that we’ve gone through what it takes to buy a condo in the city, let’s consider renting.