Rent vs. Buy Calculator

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Rent vs. Buy Calculator

Often, consumers find themselves deliberating over which is best: to rent a property or to buy it. There are so many variables involved, it becomes almost overwhelming. This calculator looks to make that process easier, by offering a simple series of boxes into which the consumer will enter their details. Once done, the calculator will take all these figures into consideration and come back with some answers. From these answers, the consumer will be in a better position to weigh the two options of rent versus buy.

How to use it

The first four boxes on the calculator concern renting a property. The user must enter all the possible expenses of renting: monthly fees, insurance, not to mention the rent itself – plus, any increases in rate. Under this, they will enter the significantly more complicated figures involved in buying a home. The purchase price, loan amount and loan duration, but also more specific details such as the appreciation rare and maintenance costs. Once done, the calculator will work out the cost of each option, as well as that of the down payment and the future value of the home.

Example

The Rent vs. Buy calculator is a complicated one, so let’s walk through an example so as to make it easier to understand. In this example, a person is paying £1,000 a month in rent, supplemented by $250 in additional fees. The monthly insurance is $10, and the annual increase in rent is around 5%. The property being rented could be bought for $200,000, with an annual appreciation rate of 1%. The loan would be for $150,000 at an interest rate of 3% over 15 years. With closing costs ($5,000), as well as annual homeowners insurance ($1,000), property taxes ($1,000) and maintenance ($1,000) to be paid. If we enter all these figures into the calculator, we are shown that the total rent paid over this period would be $290,000, whereas the property would cost $286,000 to buy.




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