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MY REAL SERVICE |
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REAL INFO |
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Live in a $300,000 home for less than
$150 a month by buying instead of renting
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| There are only two valid reasons for not buying: |
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1.
You live with your parents rent-free, or |
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2.
You live in a government rent-subsidized apartment where you pay $500 a
month for a place that would normally rent for $1500. |
 Let’s see what happens when you buy instead of rent. In our
example, we will use a $300,000 home on which you make a 5% or $15,000
down payment, but the same principle applies to almost any home. The
payments are based on a 25-year mortgage amortization, a five-year term,
and the interest rate is 5.00% per year. According to the Toronto Real
Estate Board, the average price of Single-Family Dwelling went up in 25
years, from $90,203 in 1981 to $351,941 in 2006 that is total of 390%. We have assumed only an average annual appreciation of 5%. |
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| YOUR COST – 1 YEAR (BLENDED PAYMENT – PRINCIPAL AND
INTEREST – IS $1,703.16 PER MONTH) |
| Monthly mortgage payments on $292,837.50 borrowed (including 2.75% CMHC insurance) |
$1,703.16 |
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X
12 |
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Yearly
Mortgage Payments |
20,437.92 |
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Plus:
Real Estate Taxes |
$3,000.00 |
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Total
Yearly Cost |
$23,437.92 |
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YOUR
COST – 5 YEARS |
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Total
Payments (5 X 23,437.92) |
$117,198.60 |
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Minus
Appreciation (5% or $15,000 per year for 5 years) |
$75,000.00 |
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Minus
Principal paid under the Mortgage |
$33,654.49 |
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NET
5-YEAR COST |
$8,535.11 |
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ACTUAL
COST PER MONTH $8,535.11
÷ 60 months |
$142.25 |
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