Mortgage vs. Rental Calculator
Should you buy or rent? Compare the true long-term costs and benefits of homeownership versus renting in today's BC market, including hidden costs and future value.
Mortgage vs. Rental Calculator
Property & Mortgage Details
Rental & Economic Factors
Transaction Costs
Economic Factors
If You Buy
If You Rent
Analysis
Key Insights:
- Renting and investing is financially advantageous over this time period.
- Property appreciation of 3.0% per year outpaces inflation, increasing the value of homeownership.
- Initial monthly ownership costs are $2,946 lower than renting.
- Your mortgage will be partially paid off after 10 years.
Net Worth Comparison Over Time
This chart shows the estimated net worth for both scenarios over time. The homeowner's net worth includes home equity (property value minus mortgage balance) less total costs. The renter's net worth shows investment growth of saved funds less total rental costs.
Key Assumptions
- Purchase price: $800,000
- Annual appreciation: 3.0%
- Selling costs: $56,000
- Down payment: $160,000 (20%)
- Interest rate: 4.0%
- Amortization: 25 years
- Inflation rate: 2.5%
- Investment return: 6.0%
- Rental increases: 5.0%
* This calculator provides estimates for informational purposes only. The comparison is based on the inputs provided and makes certain assumptions about future economic conditions. Actual results will vary. Consult with financial and real estate professionals for personalized advice.
Key Factors to Consider
Upfront Costs
Buying requires substantial upfront costs including down payment (minimum 5% in BC), closing costs, legal fees, and property transfer tax. Renting typically needs first and last month's rent plus a security deposit.
Long-term Appreciation
While homes in BC have historically appreciated over time, this varies by location and economic conditions. Our calculator helps you model different appreciation scenarios to make an informed decision.
Market Timing
Buying in a downmarket can yield greater long-term returns, while buying during price peaks can take years to break even. The rental market fluctuates too, with different factors affecting rental rates.
Tax Implications
Homeowners can benefit from capital gains exemptions on primary residences. Renters miss these tax advantages but may have more flexibility to invest elsewhere with potential tax benefits.
Lifestyle Flexibility
Renters enjoy greater mobility and fewer maintenance responsibilities, while homeowners benefit from stability, customization freedom, and potential income opportunities like basement suites.
Hidden Costs
Homeownership includes property taxes, insurance, maintenance, strata fees, and special assessments. Renting includes fewer direct costs but lacks equity building and is subject to landlord decisions.
Common Questions About Buying vs. Renting
Is it always better to buy than rent?
Not necessarily. The decision depends on various factors including how long you plan to stay in one place, current market conditions, your financial situation, and lifestyle preferences. Our calculator helps you see the financial comparison, but personal factors should also influence your decision.
How much does home value appreciation affect the comparison?
Appreciation can significantly impact the long-term financial outcome of buying versus renting. Historically, BC real estate has appreciated at different rates depending on location and time period. You can adjust the appreciation rate in our calculator to see how different scenarios might play out.
What rental increase rate should I use in the calculator?
In BC, annual rent increases are regulated and capped by the provincial government. For 2025, the maximum allowable increase is 4%. However, between tenancies landlords can increase rent to market rates. A reasonable estimate for long-term planning might be 3-5% annually, though you can adjust this based on your local market conditions.
How do strata fees impact the cost of homeownership?
Strata fees can add significant costs to homeownership, ranging from $200 to over $800 monthly depending on the building, amenities, and services included. Our calculator lets you factor in these fees and their potential increases over time for a more accurate comparison.
What about the costs of selling a property?
Selling costs typically include real estate commission (usually 3-7% of the sale price), legal fees, mortgage discharge fees, and potential repairs or staging. These costs reduce your net proceeds and should be considered in any long-term financial comparison.
Need Professional Guidance?
Talk to one of our partner realtors about your specific situation and get personalized advice on whether buying or renting makes more sense for you.
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