Friday, March 23, 2018
10 Benefits of Home Ownership
It is the Canadian dream to own a home. This dream has been ingrained in us since we were children. Being an apartment dweller for much of my adult life, I see the appeal of homeownership. A place to call your own without loud neighbors is definitely alright with me. Being of the investment mindset I also realize that owning a home is often the largest investment people have. While I do like the stress-free lifestyle that comes with renting, that lifestyle comes at a cost. The main cost is that I am paying someone else’s mortgage, which isn’t overly appealing. Today I am going to show you 10 benefits of homeownership. With spring in the air, it is all the more reason to think about this large purchase.
One key benefit of owning a home is that you can pretty much map out your monthly housing expenses for the foreseeable future. When you pay rent, your housing costs can increase annually with a legal rent increase. While it might not seem like much right now, an extra $20 a year equals $200 over ten years. The apartment that was a bargain can become less of one over time. When you own a home, you can dictate the speed in which you pay down the mortgage and in turn, keeping your monthly payments predictable. This will allow you to create a livable budget where you can save money and build for the future.
It is no secret that home prices go up over time. In fact, they can sometimes do so in a dramatic fashion like we have experienced across Canada in the past few years. This means that your home is generating wealth for you just by merely owning it. A simple rule of thumb is that your home should appreciate about 2% per year. This could lead to your home doubling in value by the time you are ready to retire. Therefore, a paid off home is generally a person’s most valuable tangible asset.
3) Forced Savings Program
This is one of my most favorites reasons for home ownership. By simply paying down a mortgage you are in fact saving money towards your future. There is nothing I like more than forced savings programs. You must live somewhere, so why not have the money you pay for that come back to you and grow over time. There are very few things in life that are forced that benefit you in such a great way. All the while, you build equity that makes you even more wealthy.
4) Tax Benefits
Owning a home can provide you several tax deductions and rebates every year when you file. First off, when you buy you are eligible for the Home Buyer’s Tax Credit. This alone can save you over $700. Making your home more energy efficient and accessible for seniors also qualifies you for rebates. Replacing the fireplace, windows and doors, and even the appliances can save you money that year as well. Doing all these things also makes your home more valuable at resale time. Simply put, your home will cost you money, but you can recoup some of it in the form of rebates and credits.
5) It Can Be Cheaper
Generally speaking, your monthly housing costs will be lower if you are paying down a mortgage rather than renting. When you rent, the landlord builds in the cost of the extras including property taxes, maintenance, utilities, and even profit. That does not mean it is always cheaper to own, but there can be savings. However, I do recommend weighing the extra costs of owning as well as having a well-funded emergency fund.
6) Freedom and Privacy
When you own a home, you can pretty much do what you want to it. Want to paint the rooms pink? Go for it! Thinking of converting your basement into a dark room and photography studio? It’s all you! Want some Edward Scissorhands style shrubs in the backyard? Go nuts! Within reason, your home will be your castle to do what you wish. You also have the privacy that comes with homeownership which includes not having to deal with a landlord that may want on the property at any time. You are basically your own governing body, and that is very appealing.
7) You Always Have a Place to Live
While this seems very obvious, it is very important and more complex than you think. Your landlord can get rid of you at the end of your lease if they wish, and that is not good. When you own, you can stay as long as you like. Also, when you are retired, secure housing becomes even more important. While on a fixed income, paying for housing can be very costly. Having your home paid off before retirement allows you to live very cheaply during your later years. This can be the difference between a poverty-stricken or prosperous retirement. Speaking of retirement….
8) Retirement Vehicle
Yes, your home can be used to fund your retirement. Outright owning your home is a great way to save on expenses as mentioned above. It can also be used to fund your retirement by selling your home and using the proceeds as you wish. You can downsize if you wish and save money that way. You can even rent out your home and use it as a recurring income stream as you travel the world during your retirement years or live up at the cottage. Quite simply, your home may just be the boost to your retirement income that you need to last you through your golden years.
9) An Unlimited TFSA
Through the principal residence exemption, the sale of your home is completely tax-free to you the owner. This makes it an unlimited Tax-Free Savings Account. Every upgrade, every dollar put in, and every year that passes make your home more valuable. For this reason alone, owning a home is very attractive. You have no other savings vehicle where you can put so much in and receive it all back tax-free. Of course, there are property taxes during the time you own the home, but those go towards local initiatives. Your home builds all it’s equity tax-free and that can prove to be very lucrative for you and your family.
10) Leave a Legacy
Leaving your family home to your children is a great way to leave a legacy. You have worked hard your whole life to save every penny and that might only get you enough to live comfortably in retirement. By having a paid-off home, you have in fact left your children an inheritance. Depending on yours and their wishes, the home can be kept in the family or sold for a profit when you pass on. This practice has been done for many generations and is often the only gift some parents can leave their children. You can do something very special for the ones around you by becoming a homeowner.
Being a homeowner is a huge responsibility and it should not be taken lightly. It isn’t cheap, and it isn’t easy, but it can be very rewarding, and it can be very lucrative. There is a reason owning a home is the dream of most Canadian’s. It is a fundamental piece of most people’s financial plans, so taking the proper steps to becoming a homeowner is crucial to your success.
“What you get by achieving your goals is not as important as what you become by achieving your goals.” – Zig Ziglar
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