Various events or certain opportunities may lead you to consider your options regarding your living conditions and where you want to practise your profession. Here are some questions and answers to help guide your decisions.
I would like to settle down somewhere for a while and build some wealth: should I consider buying a condo or a house?
This option could meet your needs:
- Becoming a homeowner requires more money at the outset because it is an investment, usually over the medium or long term.
- It provides you and your family with some stability and a sense of control over your life and environment.
- You have access to certain grant programs (federal or provincial) to improve your home.
Key considerations before taking this step:
- You must qualify for a mortgage and have the required down payment (5% to 20% of the asking price, plus insurance and taxes).
- The expenses associated with the purchase are significant (notary and appraisal fees, welcome tax, moving costs, etc.).
- It’s a long-term financial commitment (mortgages have an average term of 25 years, with renewal every five years, and property taxes are an annual expenditure).
- You will need to invest regularly (repairs, renovations) to maintain the value of your property and set aside an emergency fund of three to six months’ salary to cover unexpected expenses.
- If you need to sell your property quickly for any reason, you could lose money.
- You’re less mobile because you are tied to a specific geographic location.
If I am considering where I want to practise my profession and the professional setting that would best suit me, would renting be preferable?
This option could meet your needs:
- For many tenants, mobility and peace of mind are essential.
- Despite increases in recent years, the amount of rent you pay can vary, depending on the location and size of the desired accommodation.
- Almost all general maintenance costs for the building are covered by the landlord.
- Rent covers all costs related to renting, except for your moving costs and insurance for your personal belongings, your electricity bill, your Internet service, or other specific services.
- Being a tenant involves less financial risk and no long-term commitment, and it’s easier to move to another area of the city or country.
- The financial cost is less constraining and is limited to the rent.
Points to consider before choosing this option:
- When you pay rent, you don’t build equity, so you don’t gain financial leverage.
- Wealth must be created in other ways, for example through an investment portfolio.
- You could be evicted from your home if the owner decides to take it back for their own use, and you will not be able to make any renovations without their permission.
This calculator will help you assess your financial potential.
A few more questions to help you make the right choice:
- For your profession, do you want to live in a large urban centre or would you prefer to practise in a small town or rural community?
- Are you involved in a less traditional, more mobile practice, or are you looking to put down roots in a community?
- Do you already have or want a family and children, and does that mean you need a certain amount of physical stability?
- How do you see your future over the next ten years? While your answer will likely not be definitive, it will give you some points of reference for your choices.
Weigh the pros and cons of each option, think about your situation, and follow the life plan you have set for yourself.
Above all, talk to your Wealth Management advisor to fully understand the financial implications of your decision. Our goal is to support you on your path to success!
