The real cost of home ownership

Pira Kumarasamy 18 April, 2019 | 5:00PM

We’ve heard it all before – renting is like throwing money into a pit and watching it burn. There’s no greater investment than purchasing a home. Mortgage payments help build equity. A home’s value will grow over time.

Canadians prefer to own their homes, because it gives them the opportunity to build wealth while holding a tangible asset. However, what starts out as a dream could end up costing far more than originally anticipated. A recent RBC poll found that four in 10 Canadians identify or have identified as being “house poor” - a concept that refers to being overextended and spending a large portion of your monthly income on housing related costs.

The alternative to home ownership is renting, for a presumably lower monthly cost, and investing the difference into a well-balanced portfolio. Let’s take a look at both scenarios.

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About Author

Pira Kumarasamy

Pira Kumarasamy  Pira Kumarasamy is a financial writer who writes for Morningstar on personal-finance topics, with an emphasis on issues affecting the millennial generation. She holds a bachelor of arts, economics and accounting from Wilfrid Laurier University.