Living with roommates in a dorm room or in an apartment building has always seemed like a rite of passage for college and university students.
These days, though, many parents — and even some students — are looking into ways that buying a brand-new home can be a better investment. Doing this requires a down payment, but if you can get past this hurdle, there are some great advantages.
Learn more to help you decide whether you should rent or buy housing near campus.
Of course, the biggest benefit to buying a home instead of renting an apartment is the opportunity to build up some equity. Every time you pay rent, you boost the landlord's profits, but when you are paying a mortgage, you’re building up equity of your own. That equity could eventually become a nice down payment on a first family home.
Some people are able to build up even more equity by having a roommate in the home they’ve purchased. The extra rent money from the roommate adds extra to the principal balance of the mortgage and offsets the cost of home ownership.
Purchasing a home saves the hassle of looking for a new rental unit each school year and also provides the ability to plan ahead. For example, younger siblings could live in the home if they attend a post-secondary school in the same area).
You might also think about buying the home as a long-term investment. Once your child graduates and moves out, you could turn the home into a rental property and rent your property to future students.
The longer you hold on to the property, greater is the opportunity to earn a profit on resale. Knowing if your child will continue to pursue higher education, stay on after graduation or if another sibling moves in down the road are all factors to consider.
Quality Living Arrangements
Let’s face it: the types of apartments that most students can afford aren’t always in the best locations. Buildings may be run-down, and the neighbourhoods may not feel safe after dark.
By purchasing a home for your child to live in while attending school, you have much more control over the quality of their living environment. This can give you peace of mind knowing they live in a safe, new Regina neighbourhood.
Ultimately, it’s smart to crunch the numbers. How much will it cost to rent a home near campus? If your child lives in a dorm room on campus, is the cost covered by his or her scholarships and financial aid package? Will a mortgage payment be significantly more or less than the rent? How much equity will you have in the home after graduation? The answers to these questions and more can guide you to the right decision for you.
Did you know?
There are mortgage programs that enable qualified buyers to purchase a home for immediate family members with as little as 5% of the purchase price as a down payment?
Most people rent homes during the college years, but buying a home isn’t a bad idea either. If you think you or your child might be ready for home ownership, come speak with one of our Area Managers about how to make that possible.