How to Decide: Renting vs. Buying in Canada
The decision to rent or buy is one of the biggest financial choices you will make. In markets like Toronto, Brampton, and Vancouver, high home prices often make renting seem cheaper in the short term, but buying offers the advantage of building equity.
The 5% Rule (The Math Behind It)
Many financial experts use the "5% Rule" to make a quick comparison. If the annual unrecoverable costs of owning a home are lower than your annual rent, buying makes sense.
- Property Tax: Typically 1% of the home's value.
- Maintenance: Approx. 1% of value (repairs, roof, furnace).
- Cost of Capital: Approx. 3% (Interest payments + Opportunity cost of down payment).
Frequently Asked Questions
Our simplified estimate includes a standard closing cost buffer. However, for exact numbers in Ontario, you should check our dedicated Land Transfer Tax Calculator.
With current interest rates hovering around 5-6%, the monthly cash flow for renting is often lower than a mortgage payment. However, renting offers zero return on investment, whereas mortgage payments are essentially "forced savings" once interest is paid.