The primary financial advantage of owning real estate is the equity you build as your mortgage is paid down. The longer you wait, the more time you lose to grow that equity. Even if rates drop, higher prices can erase any savings on interest. In many cases, those who wait to buy end up with less equity and fewer financial gains in the long run.
The Numbers: Buying Now vs. Waiting for Lower Rates
Let’s compare two scenarios:
Scenario 1: Buying Now
- Home price: $700,000
- Down payment: 20% ($140,000)
- Mortgage amount: $560,000
- Interest rate: 3.25%
- Amortization: 25 years
Using these terms, the monthly mortgage payment is approximately $2,730. Here’s how much principal is paid down and equity is built over the first 30 months:
| Month | Equity Built |
|---|---|
| 6 | $8,300 |
| 12 | $17,000 |
| 18 | $26,000 |
| 24 | $35,400 |
| 30 | $45,000 |
By month 30, you will have built $45,000 in equity, just from principal paydown. This doesn’t include any potential home appreciation, which could further increase your total equity.
Scenario 2: Waiting for 6 Months for Rates to Drop
- Home price (after 6 months): $730,000 (a 4.3% price increase)
- Down payment: 20% ($146,000)
- Mortgage amount: $584,000
- Interest rate: 2.75%
- Amortization: 25 years
At the lower rate, your monthly payment would be about $2,686. However, because you waited 6 months, you only have 24 months left in this comparison. Here’s the equity built over the next 24 months:
| Month | Equity Built |
|---|---|
| 6 | $7,800 |
| 12 | $16,200 |
| 18 | $25,100 |
| 24 | $34,800 |
By month 30, you’ll have built $34,800 in equity, which is $10,200 less than if you had bought earlier at a higher rate. Even with a slightly lower monthly payment, the missed time for equity-building results in a smaller total gain.
Key Takeaways
- Delaying your purchase means losing equity-building time. Even with a lower rate, the missed opportunity for principal paydown can cost you tens of thousands of dollars in equity over a short period.
- When rates drop, prices typically rise. Ottawa’s real estate market tends to experience price surges when borrowing becomes cheaper, meaning any savings on interest are often offset by higher home prices.
- Wealth in real estate comes from holding property long-term. The longer you own your home, the more equity you build through both principal paydown and potential price appreciation.
Final Thoughts
If you’re waiting for lower rates before buying your home in Ottawa, think carefully about the true cost of waiting. The sooner you start building equity, the better your long-term financial position will be. With the right strategy—and a trusted real estate advisor—you can navigate today’s market confidently and make a smart investment in your future.
If you have questions about whether now is the right time to buy or sell, contact us at Evans Real Estate Group. We’re here to help you make informed decisions that build lasting wealth.
The Evans Real Estate Group Blog 