Rent vs Buy calculator

Use the Atomic Home Loans Rent vs. Buy calculator to compare your financial position after 15 years of renting vs. 15 years of home loan repayments.

It’s often debated whether it’s better to a rent a property or to purchase a property.

Renting offers you with the ability to move locations more conveniently, it requires much less in up front capital requirements, and often, it is actually cheaper to rent certain properties than it is to buy them.

This rent vs. Buy calculator will allow you to determine whether a certain property makes more sense to buy, or to rent.

There are a couple of assumptions that need to made, some of which require speculating what will happen in the future. This includes the rental increase amount, ongoing cost increases, home appreciation rates, and loan interest rates. All of these are subject to market conditions outside the control of a homeowner.

That said, this calculator will give you a very good idea of what your position will be like after 0-30 years if you were to buy a property to live in, or rent the property you live in.

To use this calculator, first input your existing savings and the current interest rate your savings are attracting. This savings/investment return would be approximately 2% if your money is sitting in a bank’s savings account, or it would be about 6-7% if it were invested in shares.

In section one, financial position, you would also input the time frame to be analysed. This can be anywhere up to 50 years.

The next step requires you to input your Rent details, including the current rental amount along with the rental increase. This can be assumed to be between 2.5% – 3.0%.

The final section requires you to input the details associated with buying the house. Here, you need to include the purchase price, total closing costs, ongoing property maintenance costs, ongoing maintenance cost increases and the predicted house value appreciation rate. Based on your current savings, purchase price and upfront purchase costs, the loan amount required will be automatically adjusted. Next, input your loan term (standard 30 years) and the average interest rate you expect over the loan term. To be conservative, you should use 5.5% as opposed to the current, record low interest rates of sub-3.70%.

The results will show you exactly which of the two, buying or renting, will be the better option for you in the long term.

 

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