Despite being in the mortgage business, we’re the first to admit that renting entails a big cost difference (read savings) in a lot of cases.
Here’s one example. We know a couple that was considering purchasing this townhome in West Vancouver for $879,000 (this is the actual photo). A similar unit down the road was listed for rent on Craigslist at $3300 per month.
On an $879,000 property with 10% down/6% interest/25-year Am., the monthly payment would have been $5061. Add in property taxes and strata fees and it came to $6003 a month.
That’s over $2700 more per month than same-style rental unit down the street. That doesn’t even speak to all the other purchase costs.
The moral is that you can do a lot with $2700 cash each month (which is about $4500+ before taxes). The house would need to appreciate at least 3.7% a year for you to break even. (That’s been an easy target in Vancouver lately but who knows what the future holds).
Naturally, if you invested that $2700 savings each month the break-even point would be significantly higher.
Food for thought…
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