Rent vs. Own Calculator
Use this calculator to compare options for renting or buying a home. Shows the Break-Even annual increase in a home value.

The Rent vs. Own Calculator determines how much a property must increase in value each year to perform as well as the rental option. Fill in all the fields below and click the "Calculate" button to view the results.
Purchase : Monthly : OWN Monthly : RENT
Price : Taxes : Rent :
Down Pmt : Other : Incr %/yr :
Rate : % Condo Fee : Other :
Mtg. Type: Cdn US OTHER Rates :
      Term: Amort. Savings %:
Insur. Fee: Yes No Marg. Tax %:
Home Sales Fee : %
The rental alternative will allow you to save and invest both the downpayment of $ 25,000 and the monthly rental savings, initially at $ -8. At the end of the 36 month term your before-tax investment will have grown to $ 24,676, assuming the savings rate of -0.04 % per annum. After paying annual income taxes at 0 % on the investment interest gain, the investment will have grown to $ 24,676.

In order for the home purchase alternative with a mortgage interest rate of 3.95 % to perform as well as the rental option, the annual rate of property appreciation must be at least -0.32 % . Total property appreciation of -0.9 % together with principal repayment would result in homeowner's equity of $ 29,627 in 36 months, less the 5 % cost to market the home of $ 4,951, for a net gain of $ 24,676.

If the home value increased by more than $ -984 ( -0.9 % ) in 36 months, purchasing would be a better financial option than renting.

Canadian Calculation - Compounding Semi-Annually
RENT OWN
Down Payment (25 %) $ 25,000
First Mortgage Amount (Includes Ins. Fee of $ 0) $ 75,000
TOTAL PRICE   $ 100,000
 
Monthly Costs

Mortgage Payment

 $ 392
Property Taxes $ 0
Condo Fees $ 0
Other Costs $ 0 $ 0
Rent Payments
($ 400 Month 1 to $ 400 Last Month)		 $ 400
Total Monthly Payment  $ 400  $ 392
Monthly Cash Savings  $ -8  
  RENTAL cost always lower than Monthly OWNERSHIP cost in example.
Future Value at Term ( 36 months)

Down Payment Saved (@ -0.04 %)

 $ 24,963

Monthly Cash Savings (@ -0.04 %)

 $ -287

Taxes assumed to be paid annually (12th period) on interest.
 
Required Home Price at Term End $ 99,016
Less : Mortgage Balance ( $ 69,389 )
Less : Sales Commission (@ 5 %) ( $ 4,951 )
Equity at Term  $ 24,676  $ 24,676
Less Income Taxes on gain (@ 0% )  ( $ 0 )  $ 0
NET After Taxes  $ 24,676  $ 24,676
 
Required ANNUAL Home Price Increase Rate -0.32 %
Required TOTAL Home Price Increase % (36 months) -0.9 %
Required TOTAL Home Price Increase (36 months) $ -984
It is always difficult to forecast home price increases, but if the likely Annual Increase is higher than -0.9 %, then buying a home would be the better option. If home prices do not rise by -0.9 %, then renting would be a better option. Note that other factors with home ownership may impact the financial decision including the potential to borrow funds at lower rates if you own a home.

Input a 0% commission rate if a sales commission is not payable. The savings rate is the percentage return on funds saved. The Mortgage Insurance Fee (Insur. Fee - ie. CMHC) is usually required for down payments less than 25%.

Other factors to consider include heating costs - are they included in rent ? Home Insurance costs may also be factored in as another cost. Additionally, maintenance costs should be considered as part of home ownership and may be added to "other costs".

COMPARE RATES
TERM OURS BANKS
6.mo
1yr.
3yr.
5yr.
 4.45%
3.20%
3.95%
5.44%

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Figures are rounded to nearest dollar.
The above information is for illustrative purposes only. We cannot guarantee its accuracy. Please contact your financial advisor for more specific information.
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