Is It Better to Rent or Buy a House in Canada?

There’s a scene in the 2004 film, “Million Dollar Baby”, where Clint Eastwood’s character, Frank, visits Hillary Swank’s character, Maggie, at her run-down apartment and tells her to secure her future, and use her fight winnings to buy a home for her family.

I watched this movie when I was 23 years old, and let’s just say that’s the scene that I remember all these years later from the movie (to be clear: that was NOT the major plot line of the movie, lol).

That was great advice, and also an expectation that my parents had of me as well. Renting was not an option. It was seen as throwing your money away, not something the child of hard working immigrants should disrespect her parents doing.

Did I miss out on living the carefree downtown life of a twenty-something? You bet. At 26, I purchased my first home – a townhome in a very suburban Mississauga setting, not the cool locale of 20-somethings. But. Do I regret that decision? 100% a resounding NO.

Had I not jumped on the property ladder at the time I did, and waited until I got married, buying that “family home” would’ve been that much harder.

So for this week’s blog post of “Is it better to rent or buy a house in Canada?”, please know that I come into this with a HUGE bias.

Is it Better to Rent or Buy?

I truly don’t think it’s ever a bad time to get into the Real Estate market UNLESS you don’t plan on owning the home for at least 5 years. That doesn’t apply to trading up or down, just selling and not buying again. The Real Estate Market is much like the stock market. There are ups and downs, but as long as you’re in it for the long haul, you will, based on historical data, come out on top. However, there is a lot of discussion these days, what with the high cost of homes, whether renting makes more sense.

What’s the Argument For Renting?

The argument is that people can pay for rent, live wherever they want to live, and then take the excess cash they would’ve had for buying a home and the high mortgage payments, and investing that money. With this year’s record breaking stock prices, many people want to get on that gravy train.

That may work for some. But here’s what we know about the average person’s ability to save. In a recent survey by TD Bank, only 58 percent of Canadians are making investments at least once a year, and a third of Canadians have never invested (34%).

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Mortgage Vs Renting

As humans, we have lofty ideas and expectations, but sometimes unless we are forced to do something, those ideas get lost within the noise of everyday life. You know what forces you to “save”? A mortgage payment.

In fact 99% of Canadian mortgage holders are in good standing. Despite the current economic environment characterized by higher interest rates, mortgages in arrears in Canada are at the lowest level in decades (data from a 2025 study from the Canadian Bankers Association).

Canadians LOVE homeownership and will protect their payments at all costs. If that doesn’t sound like forced savings, I don’t know what does.

Planning For the Future

Owning a home also creates a financial plan for your future.

Let’s say the average amortization on a mortgage is somewhere between 25-30 years at the start of the home-buying journey. The average age of a first time home buyer in Canada is 32 (it is much higher in Ontario, at 40 years old). By the time you are 62, your mortgage will be paid off, freeing up piles of cash as you enter your retirement.

Plus, the amount you pay per month is generally the same amount over those 25 years, depending on the interest rate that you renew at the end of each term. Minimally, if you lock into a 5 year term, that number doesn’t change for those 5 years.

Break the Cycle of Renting

In contrast, if you’ve decided to rent, you will continue to have to keep paying rent, well beyond your retirement years (until death, some might say).

In addition, the cost of rent has consistently been increasing. In fact, rent prices have increased 34% since their pre-pandemic low in April 2021. Of course, if you are in a rent controlled apartment, at the current allowable amount that rent can increase each year (2.5% in Ontario), you would not experience that type of growth.

But still, after 30 years of living in the same apartment at the current allowable rent increase, a $2400 monthly payment would balloon to $5038 at the end of 30 years (of course, there are a lot of assumptions made here – that the allowable amount doesn’t increase/decrease, whether your landlord actually chooses to increase rent, whether the current market would make sense for these types of rent increases).

The Freedoms of Owning a Home

One of the big reasons people advocate for rent vs. own, is that it gives you the freedom to move where you want, when you want. My friends! Remember that 34% growth in 4 years? Something tells me you won’t want to give up $500/month (the average increase since April 2021) just to live somewhere new.

Ok, Steph, but what about the down payment? This is where my argument for home ownership starts to crumble. I know. The average cost of a home in Canada is $691,299, and almost double that in the GTA, coming in at $1,120,870.

Let’s take the GTA home price to work through an example, seeing as that’s where I do the bulk of my business.

Assuming you put down the minimum down payment on an average home (and remember, new changes last year increased the price of home ownership on insured mortgages (that is homes that don’t have a minimum 20% down payment, from $999,999 to $1,499,999) you’re looking at a down payment of about $87,087.

Searching for advice on buying a family home? I’ve got plenty more advice-filled blogs.

How Much Mortgage Can I Afford?

And this is where I start to speak to two different groups of people: those who don’t have parental financial support, and those who do. The “inheritance culture,” as it is called, is a huge factor in the viability of home ownership.

I won’t get into the socio-economic-political components of this, but I just want to highlight here that if home ownership is a goal, and you don’t have financial assistance from your parents, your plight is not lost on me.

In fact, at least 35% of first time homebuyers admitted to receiving financial assistance from their parents or relatives towards the purchase of a home. For those who don’t have that help, assuming you are saving about $500 a month, it will take about 13 years to save for a down payment.

Which, if you take the average age of a first-time home buyer in the GTA being 40, 27 years old would have to be when you start saving. All while paying rent to live somewhere (or staying at home until you can afford to save up the down payment – a whole other issue).

Make Your Move

So. To the people who get financial assistance from their parents. Run, don’t walk, and put that down payment on a home. It doesn’t have to be perfect, but it sets you off on the first steps to a secure financial future.

For the remainder of you who don’t have that help, keep in mind that 65% of people were able to make their down payments on their first home without the help of parents. It may take longer, but you can still have that mortgage paid off by 65, assuming it takes you until 40 to save up for the down payment.