The rules in Canada changed in the last six weeks back or so. Twenty percent down payment, minimum for rental properties. Buyers have to qualify for the five year fixed rate, even if opting for the variable rate. We were considering buying the duplex we live in, until the minimum down payment went to 20%. Can't swing that. Our rent on our side of the duplex (2BR, 3Br on the other) is still more than the mortgage payment would be, but there's no way I can get enough for a 20% down payment. I think the maximum amortization is still 35 years.
Buying has many hidden costs, and may not always be profitable. You say rent is more than the mortgage payment would be, did you take into account property taxes? Any reasonable house would have 3000 or 4000 $ in property taxes. So add 250 or 300 $ per month to your mortgage payment. Is it sill lower than the rent you are paying?
Then there is the insurance. With owning, you must insure the entire house, with renting; you insure only the house contents. Also, house usually has much higher utility bills compared to an apartment. Then there are repairs to the house. If it is an old house, something usually goes wrong with it, and every year you may have to spend so much fixing the place.
My son recently bought his house for 165,000$. He was also looking to renting a two bedroom apartment (the house is about the same size, plus the basement). I did some rough, back of the envelope calculations. If he can sell the house for 190,000 $ (six percent of which goes to the real estate agent right away) in five years’ time (he will complete his residency, and almost certainly will sell in five years), he will just about break even, when compared to renting.
We bought our first house when we were both 33 years old (in England). Until then we were renting, I didn’t see much point in buying. The money we had, I was able to invest to get substantial rate of return.
So it all depends, buying is not always the more profitable thing to do.
