| "Owning a home is a keystone of wealth… both financial affluence and emotional security." So says an American finance expert, Suze Orman. But she is not the first one to say such words of wisdom. A good house is perhaps the oldest measure of a settled lifestyle. It reflects one's status and monetary standing to the outside world. It is a gauge of how far one has progressed in life and how prosperous that progression has been. The Pakistani mind-set also works in the same way. If you are from the young, rising and successful clique, the next step after your first promotion is purchasing a house. Even the big loan taken to finance the new house is a yardstick of how far one has reached up the corporate ladder. Since the past few months now I too have been searching for 'a suitable house' to call my own. Urged by friends, family and co-workers to embrace the permanence that comes to an immigrant when she/he owns a house, I jumped into the property buying game, which is not a business for the weak hearted in Canada. So far all I have been able to do is just use up a lot of energy by visiting potential homes and then running back to compare my bank's financial statement, my payroll and then go back and begin the search again. The more I try and work the numbers and come up with one that suits my bank account I come up with a blank! And so I have been wondering how many of those profound notions are true about security resulting from owning the roof over your head. In fact, with the financial structure of today's living needing a constant and easy cash flow, it doesn't seem that the above maxim holds true anymore. Particularly in North America – the US, half of which hasn't recovered from the property crash of 2009 and the Canadian half has property prices rising at a high rate – an 'owned house' could actually become more of a liability rather than an asset. Buying a house in Pakistan and buying it anywhere else in the world is a vastly different ball game. And particularly, buying a house in Canada is a proposition which entails a life-long commitment of paying increasing taxes and rising mortgage payments for as long as 30 years. During the 'act' of buying, no negotiations – not even price haggling – are conducted without paper work. To even quote an offer in response to the buying price, a contract must be drawn up with the price offer and the down payment clearly stated on it. The seller than comes back with a counter offer which either concurs with the offer of the buyer or states another altered quote. This goes on back and forth till both parties agree on the price and the rest of the terms and conditions of full payment/ possession etc. and the deal is then sealed to be culminated on a schedule of payment which is legally binding. There is much more to it but it gets even more complicated as the business nears closure and would make for boring reading. What made me question the wisdom in 'pride of ownership' had more to do with how much peace of mind I was actually losing instead of gaining. No sale can be made here by an average salaried person without a mortgage. And mortgage approvals depend upon many things including one's salary and existing debt (credit cards, car leases, etc). When the bank gives the buyer the mortgage it is only after securing a healthy profit for itself through heavy interest returns. So the 'buyer' is initially paying off just the bulk of the interest through the monthly mortgage payments and hardly touching the principal loan amount. Then there are taxes added to monthly costs. So annually, one is hardly building any equity, just battling with the inflating mortgage rates, taxes and miscellaneous expenses that come with a house of your own. The expenses don't end even after the deal is done. However, if one is renting, there are no bank closures to worry about, no taxes to bother with, and not even the monthly gas, electricity, water or heating bills. All are covered in the rent. And one can rent a more luxurious space at a smaller monthly amount and live a more comfortable existence and enjoy more extravagance. But I was taught that planning for the future is an all important part of stability for oneself and for one's kids, and owning a house is a major part of that future planning. But the crash of the US real estate has shown that home ownership is no guarantee for a secure investment. Currently, the US properties are going for peanuts and all those who had invested hundreds of thousands in their houses are not being able to recover even 50 per cent of it. Even a Pakistani two-bedroom property is selling for a much higher price point than a three-bedroom Florida condo these days! And so I wonder, is it logical to take on the life-long worry on the grounds of bettering our future in this impermanent world, rather than living a hassle free existence and enjoying the present? Think about it, especially if you are planning on moving to this part of the world anytime soon! maheenrashdi@yahoo.ca |
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