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Ownership Costs vs Rent
The calculator, at the bottom of this page, will help you determine loan amounts, mortgage qualification, or whether you should be renting or buying. I have provided some guidelines for using this tool. The ING™ calculator on the left column is a good tool as well. Ready-Made If you want to see a report that has pre-calculated the benefits of buying vs renting using a variety of factors, go to Home Buyer Reports and download the free 5-page report "Why You Should Buy Not Rent". See how you could earn $146,000 more in ten years by buying a $200,000 home depending on market growth assumptions ( a key factor). Self-Serve Complete the form below by estimating the Cost of Home, Down Payment,Monthly Income and clicking on Calculate Now. Try different estimates to get a range of possibilities.
See the Results
There are several ways to view the results of each of your estimates.
To view the different results of your calculation, click on the various tabs.
Rent vs Buy
Try different estimates here to get a range of results.
Guidelines
To help you with your estimates, here are some facts:
The market appreciation (of resale homes) in the GTA has averaged over 8% per year 2005 to 2007 (much higher in some areas). Rates are expected to be more moderate from 2008 to 2009 based on numerous forecasts, perhaps in the negative 5-10% range during 2009 depending on the area of the GTA. Be conservative, since rates in the future may be less. For more information on home price increases (or decreases) for the area you are interested in see my GTA Market Watch or my exclusive reports, such as; What's Hot - What's Not.
Rent control has kept rents down but landlords can charge new tenants whatever they wish if the demand is there. Suggest you be pessimistic and use at least 2% here. The rent control rate for 2008 was 1.4%. Existing rents can be increased for a variety of reasons including landlord costs, like rising heating costs or property improvements.
Get the results by Email
To mail yourself a copy of your results, click the Receive this Detailed Analysis link found on your results page.
Help is available.
Want some help over the phone with this comparison?
Give me a call at 416-399-5832. No cost or obligation. We can fill out the form together and I will email you the results. Understanding the Terms used below: Terms in Years: Use 25 Years - This is the Amortization Period - Years it would take to pay the mortgage if the payments remained constant. You can use up to 30 years but you need to qualify with a 25 year amortization. Interest Rate: You can check for the Latest Mortgage Rates.Be sure to see ING's rates. To qualify they use a 3-Year Rate for a Closed Mortgage. Try different rates. Cost of Home: Price before Downpayment Downpayment: Use 5% - Usually at least 5% of Cost of Home. Enter this as a dollar amount. Annual Insurance: Use the default value of 0.43% - check the little box for a house; use $100 for a condo. Property Tax: Use the default value of 1.2% - check the little box for either a house or a condo. Monthly Income: Add your and your partner's (if any) GROSS INCOME - income before taxes or deductions. Monthly Debt: Add your and your partner's (if any) DEBT. Car payments, student loans, credit card minimum payments. If some are almost paid off try this without those items included. GDS: Use 32%. "Gross Debt Service" is a ratio of the cost of living expenses only compared to your Gross Income. Specifically, your mortgage payments plus Heat and if condo, half the fees all divided by your Gross Income. The higher the % allowed the easier it is for you to qualify for your mortgage. Your lender gets to pick this %, not you. The suggested value of 32% is an industry standard. TDS: Use 40%. "Total Debt Service is a ratio (like above) but with all your debt added in (car payments, credit cards, student loans, etc). The higher the % allowed the easier it is for you to qualify for your mortgage. Your lender gets to pick this %, not you. The suggested value of 40% is an industry standard. Condo Fees: Use $200 (if you plan to have few or no facilities like pools, etc. and use a higher amount, say $400 if you want a condo with amenities. Townhouse condos have low fees; downtown high rise condos have higher fees. Leave this amount blank if you are buying a freehold (not a condo) property.
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