Warning: please do not take any of the recommendation seriously as the code lacks proper V&V.

Rent or Buy?

The following tool will evaluate whether it is worth purchasing a home, provided a set of mortgage parameters and reference rental rate. In addition, the tool indicates the amount the home must appreciate for it to be worth purchasing, if applicable.

The model currently considers:

  • Mortgage insurance
  • Land transfer tax
  • Interest paid on loan
  • Home maintenance fees
  • Property taxes paid
  • Investment returns were the user to invest the downpayment instead
  • Rental rate increase year on year

And makes the following assumptions:

  • Investment gains equal to mortgage rate
  • All the rates to be posted soon...
Here is the equations for buy sunk costs
\( C_b = I_{mortgage} + T_{prop} + M + L + T_{land}\),
where \(I_{mortgage}\) is the total interest paid on the mortgage, \(T_{prop}\) is the total property tax paid, \(M\) is the total maintenance fees, \(L\) is the mortgage insurance, and \(T_{land}\) is the land transfer tax.
Here is the equation for rent sunk costs
\( C_r = R - I_{inv}\),
where \(R\) is the total rental cost, and \(I_{inv}\) is the returns on investing the downpayment at a ROI equal to the mortgage rate.

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