REVscene Automotive Forum - View Single Post

xpl0sive · 11-02-2013, 04:17 PM

somewhere earlier in this or another thread, someone provided an excelled calculation showing how much money you spend on mortgage+maintenance+bills compared to renting.

It's really simple to figure out, if you take your time to actually think, before listening to people who are already in the marker/realtors/mortgage brokers. All those people have a financial interest in the market and want you to be in it too.

I'll do the calculation using some recent sales

1 Bedroom apartment in Burnaby, 655 sq feet, purchased for $340,000
20% down payment = $68,000
3.0% interest rate locked in for 5 years.
Mortgage payment is $1,287.14
Strata maintenance fee is $202.30
Bills for hydro, water, TV, internet = $200/month roughly
Property tax $1,500/year or about $125/month
Total cost for the apartment per month is $1,814.44 give or take a few $

Now that same exact type of 1 bedroom 650 sq ft apartment can be currently found on craigslist for $1200/month, including utilities, tv, internet.

So right there, you are saving $600/month by "paying some assholes mortgage"

Now lets look at the actual cost of your mortgage

Here's a breakdown of the first 5 years

Year..........Total Paid..........Interest Paid..........Principal Paid..........Balance
Year 1..........$15,446.76..........$8,008.39.......... $7,438.37..........$264,561.63
Year 2..........$15,446.76..........$7,783.53.......... $7,663.23..........$256,898.40
Year 3..........$15,446.76..........$7,551.92.......... $7,894.84..........$249,003.56
Year 4..........$15,446.76..........$7,313.29.......... $8,133.47..........$240,870.09
Year 5..........$15,446.76..........$7,067.48.......... $8,379.28..........$232,490.81
Totals:.........$77,233.80..........$37,724.61.... ....$39,509.19..........$232,490.81

So, in 5 years, you paid $37,724.61 in interest, $1,500*5 for property tax, assuming it doesn't increase = $7,500, $12,138 in strata fees, assuming those don't increase, $12,000 in utilities cost, for a total of $69,362.61 . Let's compare that to the total amount you spent for rent in 5 years, even if it was increased every year by 3%

Year..........Rent Per Month..........Total
Year 1..........$1,200....................$14,400
Year 2..........$1,236....................$14,832
Year 3..........$1,273.08................$15,276.96
Year 4..........$1,311.27................$15,735.27
Year 5..........$1,350.61................$16,207.33
Total.......................................$61,59 4.84

So, already you have saved $7,767.77 by paying "some assholes mortgage" over 5 years.

Now, lets say you took that $68,000 down payment, and purchased some GIC's... current 5 year rate is 2.750%, paid on maturity. That would make you $1870 per year * 5 years = $9,350

So, after 5 years, you are $17,117.77 further ahead.

Also, let's say you could actually comfortably afford to pay the mortgage + utilities + strata fees + prop taxes. You pay your $1,200 rent and put the rest of your savings from paying rent into a saving's account. $600/month * 12 months * 5 years = $36,000 in savings, without any interest.

Now, some will say, "well that's great, but after 5 years, I'm in the same spot as before I rented, I have no equity."

well let's see. In 5 years you paid $39,509.19 toward your principal. You still owe $232,490.81 for your 1 bedroom 650 sq ft apartment.

You decide to sell your apartment. As per a comment earlier, chances that the value of your apartment actually increased at all, are very slim, but let's say you got lucky and it went up by 5%. Now your apartment is worth $357,000. You magically sell it at full asking.
Here's the calculation of what you're left with:
Selling Price $357,000
Your realtor's commission $7,312
Purchaser's realtors's commission $6,113
GST On commission $671
You are left with $342,904

You pay off what you owe on your mortgage, you are left with $110,413.19.
Out of that, your original down payment was $68,000, $39,509.19 was what you've paid off in 5 years, your profit = $2,904.00.

Compared to, you paid rent for 5 years, your $68,000 made you $9,350 and you have at least $36,000 in savings, equaling to $113,350
so in reality, you end up in a BETTER spot, and you take virtually no risk compared to the risk of the price of your 1 bedroom 650 sq ft apartment crashing... which over the course of 5 years is about 40%, according to the logic posted earlier

Food for thought.... by the way I forgot to include the purchase tax, but let's say you are a first time buyer and you get a break

11-02-2013, 04:17 PM	#1502
xpl0sive My homepage has been set to RS Join Date: Nov 2004 Location: Burnaby,BC Posts: 2,053 Thanked 1,185 Times in 304 Posts Failed 115 Times in 62 Posts	somewhere earlier in this or another thread, someone provided an excelled calculation showing how much money you spend on mortgage+maintenance+bills compared to renting. It's really simple to figure out, if you take your time to actually think, before listening to people who are already in the marker/realtors/mortgage brokers. All those people have a financial interest in the market and want you to be in it too. I'll do the calculation using some recent sales 1 Bedroom apartment in Burnaby, 655 sq feet, purchased for $340,000 20% down payment = $68,000 3.0% interest rate locked in for 5 years. Mortgage payment is $1,287.14 Strata maintenance fee is $202.30 Bills for hydro, water, TV, internet = $200/month roughly Property tax $1,500/year or about $125/month Total cost for the apartment per month is $1,814.44 give or take a few $ Now that same exact type of 1 bedroom 650 sq ft apartment can be currently found on craigslist for $1200/month, including utilities, tv, internet. So right there, you are saving $600/month by "paying some assholes mortgage" Now lets look at the actual cost of your mortgage Here's a breakdown of the first 5 years Year..........Total Paid..........Interest Paid..........Principal Paid..........Balance Year 1..........$15,446.76..........$8,008.39.......... $7,438.37..........$264,561.63 Year 2..........$15,446.76..........$7,783.53.......... $7,663.23..........$256,898.40 Year 3..........$15,446.76..........$7,551.92.......... $7,894.84..........$249,003.56 Year 4..........$15,446.76..........$7,313.29.......... $8,133.47..........$240,870.09 Year 5..........$15,446.76..........$7,067.48.......... $8,379.28..........$232,490.81 Totals:.........$77,233.80..........$37,724.61.... ....$39,509.19..........$232,490.81 So, in 5 years, you paid $37,724.61 in interest, $1,5005 for property tax, assuming it doesn't increase = $7,500, $12,138 in strata fees, assuming those don't increase, $12,000 in utilities cost, for a total of $69,362.61* . Let's compare that to the total amount you spent for rent in 5 years, even if it was increased every year by 3% Year..........Rent Per Month..........Total Year 1..........$1,200....................$14,400 Year 2..........$1,236....................$14,832 Year 3..........$1,273.08................$15,276.96 Year 4..........$1,311.27................$15,735.27 Year 5..........$1,350.61................$16,207.33 Total.......................................$61,59 4.84 So, already you have saved $7,767.77 by paying "some assholes mortgage" over 5 years. Now, lets say you took that $68,000 down payment, and purchased some GIC's... current 5 year rate is 2.750%, paid on maturity. That would make you $1870 per year * 5 years = $9,350 So, after 5 years, you are $17,117.77 further ahead. Also, let's say you could actually comfortably afford to pay the mortgage + utilities + strata fees + prop taxes. You pay your $1,200 rent and put the rest of your savings from paying rent into a saving's account. $600/month * 12 months * 5 years = $36,000 in savings, without any interest. Now, some will say, "well that's great, but after 5 years, I'm in the same spot as before I rented, I have no equity." well let's see. In 5 years you paid $39,509.19 toward your principal. You still owe $232,490.81 for your 1 bedroom 650 sq ft apartment. You decide to sell your apartment. As per a comment earlier, chances that the value of your apartment actually increased at all, are very slim, but let's say you got lucky and it went up by 5%. Now your apartment is worth $357,000. You magically sell it at full asking. Here's the calculation of what you're left with: Selling Price $357,000 Your realtor's commission $7,312 Purchaser's realtors's commission $6,113 GST On commission $671 You are left with $342,904 You pay off what you owe on your mortgage, you are left with $110,413.19. Out of that, your original down payment was $68,000, $39,509.19 was what you've paid off in 5 years, your profit = $2,904.00. Compared to, you paid rent for 5 years, your $68,000 made you $9,350 and you have at least $36,000 in savings, equaling to $113,350 so in reality, you end up in a BETTER spot, and you take virtually no risk compared to the risk of the price of your 1 bedroom 650 sq ft apartment crashing... which over the course of 5 years is about 40%, according to the logic posted earlier Food for thought.... by the way I forgot to include the purchase tax, but let's say you are a first time buyer and you get a break __________________ Fast, Reliable, Cheap A car can be only 2 out of the 3. Last edited by xpl0sive; 11-02-2013 at 04:35 PM.