Rent vs. Buy
Should you rent or should you buy your home? It takes more than looking at your mortgage payment to answer this question. This calculator helps you weed through the fees, taxes, and monthly payments to help you make a good financial decision.
Definitions
- Price of home
- Purchase price of the home you wish to buy.
- Cash on hand
- Cash you have for the down payment and closing costs.
- Interest rate
- The current interest rate you can receive on your mortgage.
- Amortization in years
- The number of years over which you will repay this mortgage.
- Property tax amount
- The annual amount you pay in property taxes.
- Mortgage fees
- Fees your financial institution charges for originating your mortgage.
- Maintenance/Condo Fee
- Monthly fee charged for your condominium and any other maintenance costs you expect to incur with the ownership of this home. Please note that condominiums are referred to as "strata" in the Province of British Columbia.
- Other closing costs
- Estimate of all other closing costs for this loan. This should include filing fees, appraiser fees and any other misc. fees paid.
- Total closing costs
- Total up front costs to close your loan. This is the sum of the loan origination fee, amount paid for CMHC premium and other closing costs.
- Mortgage amount
- Total amount for this mortgage.
- After-tax investment return
- Annual percentage return you would retain, after income tax was paid, if you
invested your closing costs and down payment instead of purchasing a home.
- Monthly rent payment
- Amount you currently pay for rent per month.
- Expected inflation rate
- Inflation rate used to adjust amounts subject to annual increases. This includes rent, insurance and tax payments.
- Home appreciates at
- Annual appreciation you expect in the home you are purchasing.
- Future sales commission
- The percent of your homes selling price you expect to pay to a broker or real estate agent when you sell your home.
- GST
- This calculator calculates GST at 7% of a new home's purchase price minus a GST rebate. GST rebates are calculated as follows. For homes under $350,000, the rebate amounts to 36% of GST, up to a maximum rebate of $8,750. For homes between $350,000 and $450,000, the maximum rebate of $8750 declines to zero on a proportional basis. All homes selling for more than $450,000 receive no GST rebate.
- CMHC Premium
- Mortgage insurance is paid to the Canadian Mortgage and Housing Corporation (CMHC). This includes all loans secured with less than 25% down and depending on your financial institution, with as much as 35% down. This calculator assumes that financial institutions will not charge any CMHC premium if you have more than a 25% downpayment. The CMHC premium is calculated as:
| CMHC Insurance Premium Rates*: |
Loan Size
(% of property value) | Rate (as a % of loan) |
|---|
| Up to and including 65% (over 35% down payment) | 0.5% |
| Up to and including 75% (25% to 34.99% down payment) | 0.65% |
| Up to and including 80% (20% to 24.99% down payment) | 1.00% |
| Up to and including 85% (15% to 19.99% down payment) | 1.75% |
| Up to and including 90% (10% to 14.99% down payment) | 2.00% |
| Up to and including 95% (5% to 9.99% down payment) | 2.75% |
| Up to and including 95% Flex Down** (5% to 9.99% down payment) | 2.90% |
*An additional 0.2% is added to all mortgages with amortizations of 30 years. An additional .2% is added to all mortgages with amortizations of 35 years.
**Not all Financial Institutions offer the Flex Down option
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