Should I buy, or keep renting?
It turns on how long you will stay, because the cost of buying and the cost of selling are each paid once and neither builds equity. This app prices your entry costs from your own price and municipality; what selling costs you depends on what you agree with a brokerage, and no figure here forecasts what the property does in price.
Renting is not throwing money away, and owning is not all equity. The honest comparison puts the money that builds no equity on both sides of the ledger.
On the owning side that is mortgage interest, property tax, insurance, maintenance, condo fees where they apply, and the transaction costs amortized over your holding period. Land transfer tax alone is a substantial one-time loss, and in Toronto it is charged twice. On the renting side it is rent, minus whatever you earn on the down payment you did not spend.
Buy because you want to stay somewhere and control it. If the financial case is what is deciding it, run the numbers over your realistic holding period rather than over thirty years.
What it depends on
- how many years you will stay
- the rent you would otherwise pay
- the gap between mortgage rates and returns on the down payment
- municipal property tax rate and whether the city charges its own land transfer tax
Answer it with your own numbers
You will need: purchase price, down payment, municipality.
Price the cost of getting inAlso asked as
- Is renting throwing money away?
- Is it cheaper to rent or buy in Toronto?
Next questions
How long do I need to stay in a house to break even?
Long enough for the price to recover everything you paid to get in and everything it costs to get out, and that is two numbers rather than a year count. This app prices the first from your own purchase price and municipality. It does not hold the second and does not forecast appreciation, so it will not hand you a break-even year.
Ontario
How much cash do I actually need on closing day?
Your down payment plus closing costs, which this app's own estimate puts at roughly one and a half to three percent of the price outside Toronto and above four percent inside it, because Toronto charges a second land transfer tax.
Ontario