The home you live in should is not an ‘investment’ says financial expert Jason Heath. So paying such low rent in Toronto, the couple should consider staying put and socking away more cash.
John and Jill know how lucky they are to be paying only $1,400 a month in rent in Toronto where the average rent for a one bedroom is edging toward $3,000 a month.
“The big financial question we have is whether we should consider purchasing a home as an investment, a potential place to live, or continue to try and build equity and savings through investments,” John says. Should the couple stick with their enviable rent or shake things up and buy a property? We asked them for two weeks of their spending to see what they can do.John and Jill have lucked out with a low-cost rental in a prime midtown area of Toronto. The average rent for a 2-bedroom is currently in the $3,300 range in the city and they are paying just $1,400 per month.
Obviously, lots of people would beg to differ given how much real estate prices have risen over the past 25 years in Toronto. But I also have a hard time imagining that same growth rate continuing over the next 25 years. Jill has student debt but also has the savings available to pay it off. There can be a small tax benefit for paying interest for student loans received under the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Apprentice Loans Act, and provincial or territorial government laws similar to these acts. Tax savings is about 20 per cent of the interest amount for an Ontario resident.
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