Back in 2006 when I left Canada, I sold my house and thought I’d never buy another one again. The place had been a fixer-upper and my father and I had invested a lot of time and money into it (nine years to be exact) — just in time to sell it.
I know that home-ownership is supposed to be the holy grail of the (North) American Dream, but I really wasn’t sure I wanted to ever get back into the cycle of renovations, repairs, and mortgages. It took a bit of an attitude change because as a simple search on Amazon suggests, mortgage-free home-ownership is what we are all supposed to aim for.
But I knew couples who had been renting for over twenty years and they had more disposable income than I’d ever had. When something went wrong in their place, it was the building owners, not the renters, who had to pay for it. Renters also knew exactly how much they needed to pay every month without any sort of surprise costs like a new roof or plumbing repairs.
That sounded good to me.
Generations ago in Ireland, my father’s family were renters. Yes, they owned property, but they never lived where they owned. They used the extra income from renting out the place to rent something better for themselves. And while they had those emergency expenses that any homeowner had, they considered it as a part of running a business, rather than intruding on their lives directly.
When I settled in the Basque Country, I was convinced that renting was for me. Although it irritated me a little bit that I couldn’t do up the place exactly as I would like, I was pleased to no longer have the temptation to enter into constant rounds of renovations like my parents did. They cycled through the house I grew up in, redoing one room a year, and I can’t count the number of times they completely remodeled the garden.
When my parents died a few months apart from each other then eight months after that my mother-in-law passed away, my husband and I found ourselves with a chunk of money. Given the volatile nature of the markets at that moment, investing did not seem like a good plan.
So, we got back into the home-ownership market, not just once but twice, buying a flat where we live full-time plus a second one in a sunny part of Spain. However, this second time around, owning a home is different from the first time.
- We chose to live in a tower instead of a detached home, meaning emergency expenses are shared by the whole building and in a recent case, spread out over three years.
- Our flat is half the size of the (small) house I had in Toronto, and is just the size we need.
- Renovations happened quickly, before we moved in.
- Mortgage payments are less than the monthly rent we were paying.
The second flat we bought (mortgage-free) has a double purpose, one as a weekend and summer retreat, and the other as a retirement emergency fund in case one or both of us needs to go into a nursing/retirement home. While medical costs are covered here in Spain, there is a big difference between public and private retirement residences. With the money from selling off the second flat, we will be able to live out our final years in comfort.
My siblings, however, took other routes: my sister invested in a large rambling country home and my brother sold his house and sunk the money into his girlfriend’s place, turning home-ownership into a type of romantic commitment.
When deciding if renting or owning is for you, just as with any project you undertake, it’s imperative you consider your priorities. In this case, the questions that can help you decide which option is better for you include:
- What type of financial situation do you want to be in? Fixed or variable costs?
- How important is it to you to put your personal stamp on the space you live in?
- How much space do you really need? How much do you want to maintain?
The New York Times, has a good rent vs. buy calculator. I plugged in the original numbers for our primary residence and the results confirmed that buying was the right option financially, as we would be paying about three times the amount in rent each month as we do with the mortgage.
Are you a renter or a homeowner? Do you know which is the better option for you financially? Or are there other factors (emotional, familial, etc…) that led you to choose?