INTERNATIONAL RENT VS. BUY CALCULATOR

Description
The model compares the average monthly cost generated by buying a home vs. renting one, until mortgage pay-off.


The procedure requires entering a few pieces of basic information.
More specifically, data to be entered include, for the “Buy” scenario:
• Target Home Price
• Buying Closing Costs (% of home cost)
• Annual Property Tax, Home Insurance, Maintenance & Repairs (% of home value)
• Annual Property Appreciation %
• Down-payment %
• Mortgage Rate
• Mortgage Term (40 years max)
• Selling Closing Costs (% of sale value)


And for the “Rent” scenario:
• Target Monthly Rent
• Security Deposit
• Renter’s Insurance (% of annual rent)
• Annual Rent Appreciation %


To make things easier, a number of assumptions (marked in green) are pre-filled using formulas. For example:

• Your security deposit for renting is equal to one month rent
• Annual rent increase is equal to the average historical inflation rate for your home currency/country (such inflation data for various countries are already available in the 'Inflation" sheet, missing which a default rate of 2% is automatically applied in the calculation)
• Your house down payment is 20%
• Annual property appreciation and maintenance/repair costs increase is equal to the average historical inflation rate for your home currency/country
• Your marginal income tax rate is 25% (used to calculate mortgage interest deduction and net opportunity cost of using savings for a rental deposit and a down payment instead of investing the money).

You can either use such assumptions as-is or adjust the numbers to suit your specific situation for a more precise calculation.


The model further assumes you’ll deduct on your annual taxes the costs for mortgage interest up-to the stated maximum amount (missing which the full interest amount will be used in the tax deduction calculation - if no such deduction is allowed input "0").


The Calculator accounts for the accumulation of equity from mortgage payments and factors in any long-term capital gains based on annual property appreciation % as well as cost of funding negative cash flows under both scenarios.


For each input field relevant explanatory notes are provided clicking on the "?" box.