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Blog 3 - Renting vs. Buying (or mortgage) a house

 In Blog 2, I hope I was able to provide you an idea with regards to the cost of living in Canada based on my actual experience. Now, let me share my thoughts about renting or buying a house.

Your rent is basically your expense in an apartment. You might incur extra $100 for water and electricity if it’s not included in your rent and another $100 for cable and internet. You don’t need to worry about maintenance, your landlord should be responsible for it. Also, if you own a car, you have to pay extra for parking.

When you buy a house, you should add at least 50% on top of your mortgage payment. This consists of the following:

1. $200 for hydro/electricity. This amount will depend on the size of the house. The bigger the house the higher your bill especially during winter. 

2. $200 for property taxes. This amount is dependent on the size of the house. The amount that I mentioned here is based on a $200,000 house. Property taxes usually increase every year.

3. $100 for water, waste and sewerage. In Winnipeg, the city combined this bill into one and it’s due quarterly.

4. $100 for property insurance. Again, this is dependent on the size or price of your house and what coverage you elected in your insurance policy. 

5. $100 for cable and internet. 

The expenses above are estimate and monthly except for water, waste and sewerage because the city bills you quarterly. These are the expenses that in my opinion are necessities or mandatory. If you will buy a condo, you have to pay for condo fees which can range from $200 and above per month.

You also need to consider maintenance which can be financially burdensome. Unlike in the Philippines, house repairs in Canada are expensive. When I purchased my house 10 years ago, I spent roughly $15,000 this includes replacing furnace ($2,500), central air conditioning ($2,000), roof ($3,000), hot water tank ($1,000), fence ($1,800) and other miscellaneous things.

Also, houses in Canada, especially in Winnipeg are subjected to harsh weather conditions which means houses are prone to maintenance. When there was a snow storm, ice dam formed on my roof which cause leaking and cost me $10,000 of repairs. Thank goodness my insurance paid for it.

One of the benefits of owning a house is you create equity. I guess this is why most people think that renting is a waste of money. Another benefit is you can pretty much do anything (legal of course) in your house. In apartment, you’re stuck with it and can’t even play loud music.

Also rents increase annually unlike in mortgage, payment is fixed for the term of your mortgage and it’s up to you if you want to increase your mortgage at the end of your term. If you chose variable mortgage, then your payment might change monthly.

In the end, it’s still up to you what fits best your situation. Paying $1,000 rent is not the same as paying $1,000 mortgage. Be practical and live within your means.



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