In order for the home purchase alternative with a mortgage interest rate of 3.7 % to perform as well as the rental option,
the annual rate of property appreciation must be at least -0.58 % .
Total property appreciation of -1.74 % together with principal repayment would result in homeowner's equity of $ 29,042 in 36 months,
less the 5 % cost to market the home of $ 4,912, for a net gain of $ 24,130.
If the home value increased by more than $ -1,752 ( -1.74 % ) in 36 months, purchasing would be a better financial option than renting.
Down Payment Saved (@ -0.29 %)
Monthly Cash Savings (@ -0.29 %)
Taxes assumed to be paid annually (12th period) on interest.
It is always difficult to forecast
home price increases, but if the likely Annual Increase is higher
than -1.74 %, then buying a home would be the better option.
If home prices do not rise by -1.74 %,
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".