top of page
SaferWealth Calculator™
What's Safer? Owning or Renting?
We built this for priced-out Canadian home-buyers who are tired of being told that renting is ‘throwing money away’.
SaferWealth will show you how you can grow wealth and protect your family, even if you never buy a million-dollar home.
Change these inputs to get started!
OWN TO INVEST
(mortgage payments and other
ownership costs)
Home Purchase Price
Mortgage Rate % (APR)
(assuming a fixed % interest rate for 25 years and a term range of 1-7 years, the average being 5-year term)
Down Payment
(% of home price)
(Error Message)
Closing Costs
(% of home price)
Down Payment
$200,000
Closing Costs
$30,000
$833
Monthly Expenses
(~ 1% of home price/12 months)
Mortgage Payment
$4,677
(based on a 25 year amort.)
Monthly Expenses
$833
+
Mortgage Payment
$4,677
Monthly Cash Outflow of Ownership
$5,510
RENT TO INVEST
(swapping ownership costs for stock investment with
investment insurance)
Estimated Annual Stock Investment Return %
Your Monthly Rent
(increasing at 2% annually)
Down Payment
$200,000
+
Closing Costs
$30,000
Total Market Investment
$230,000
Monthly Market Investment
$833
(Invest the monthly renting expenses instead)
Monthly Cash Outflow of Renting*
*assume outflow of owning = outflow of renting i.e. monthly budget is the same
$5,510
Cash Outflow of Renting
$5,510
Monthly Rent
-
$2,000
-
Monthly Market Investment
$833
Investment Insurance Premiums Per Month
$2,677
Here's the Results!
Wealth Accumulated...
(based on a 25 year amortization and policy year)
Home Appreciation | Owning | Renting | Winner | Advantage |
|---|---|---|---|---|
1.0% | $1,282,432 | $4,908,774 | Renting wins | +$3,626,342 |
2.0% | $1,640,606 | $4,908,774 | Renting wins | +$3,268,168 |
3.0% | $2,093,778 | $4,908,774 | Renting wins | +$2,814,996 |
4.0% | $2,665,836 | $4,908,774 | Renting wins | +$2,242,937 |
5.0% | $3,386,355 | $4,908,774 | Renting wins | +$1,522,419 |
6.0% | $4,291,871 | $4,908,774 | Renting wins | +$616,903 |
Break-even (6.57%) | $4,908,774 | $4,908,774 | TIE | +$0 |
7.0% | $5,427,433 | $4,908,774 | Owning wins | $-518,659 |
So for the next 25 years, your home will need to grow at
6.57% per year
so you don't lose any money.
The 10-year Compound Annual Growth Rate (CAGR) for Toronto residential real estate is approximately 5%
Is that really an "investment"?
Real estate should have better growth rates!
SHOW ME REAL ESTATE NUMBERS!
Year | Mortgage Payments (Cumulative) | Interest Paid (Cumulative) | Equity (with Appreciation) | Effective CAGR |
|---|---|---|---|---|
1 | $56,121 | $39,625 | $246,495 | -3.76% |
2 | $112,241 | $78,407 | $294,734 | -2.84% |
3 | $168,362 | $116,301 | $344,788 | -2.18% |
4 | $224,483 | $153,263 | $396,728 | -1.68% |
5 | $280,603 | $189,245 | $450,633 | -1.28% |
6 | $336,724 | $224,196 | $506,580 | -0.96% |
7 | $392,845 | $258,064 | $564,654 | -0.69% |
8 | $448,965 | $290,794 | $624,941 | -0.47% |
9 | $505,086 | $322,327 | $687,532 | -0.28% |
10 | $561,206 | $352,602 | $752,521 | -0.11% |
11 | $617,327 | $381,555 | $820,006 | 0.03% |
12 | $673,448 | $409,118 | $890,091 | 0.16% |
13 | $729,568 | $435,220 | $962,882 | 0.27% |
14 | $785,689 | $459,786 | $1,038,493 | 0.37% |
15 | $841,810 | $482,737 | $1,117,040 | 0.47% |
16 | $897,930 | $503,992 | $1,198,645 | 0.55% |
17 | $954,051 | $523,462 | $1,283,436 | 0.63% |
18 | $1,010,172 | $541,058 | $1,371,547 | 0.70% |
19 | $1,066,292 | $556,683 | $1,463,115 | 0.76% |
20 | $1,122,413 | $570,236 | $1,558,289 | 0.82% |
21 | $1,178,534 | $581,611 | $1,657,218 | 0.88% |
22 | $1,234,654 | $590,696 | $1,760,061 | 0.93% |
23 | $1,290,775 | $597,375 | $1,866,986 | 0.98% |
24 | $1,346,895 | $601,525 | $1,978,164 | 1.03% |
25 | $1,403,016 | $603,016 | $2,093,778 | 1.07% |
bottom of page