Year by year
What each choice would be worth at the end of every year.
| Year | Home value | Mortgage owing | Buy: after selling | Rent: investments |
|---|---|---|---|---|
| 1 | $618,000.00 | $469,303.37 | $117,796.63 | $149,645.32 |
| 2 | $636,540.00 | $458,119.99 | $146,593.01 | $170,770.64 |
| 3 | $655,636.20 | $446,427.71 | $176,426.68 | $192,383.40 |
| 4 | $675,305.29 | $434,203.34 | $207,336.68 | $214,490.93 |
| 5 | $695,564.44 | $421,422.69 | $239,363.53 | $237,100.34 |
| 6 | $716,431.38 | $408,060.44 | $272,549.37 | $260,218.57 |
| 7 | $737,924.32 | $394,090.10 | $306,938.00 | $283,852.51 |
| 8 | $760,062.05 | $379,484.04 | $342,574.91 | $308,008.69 |
| 9 | $782,863.91 | $364,213.30 | $379,507.41 | $332,693.52 |
| 10 | $806,349.83 | $348,247.67 | $417,784.67 | $357,912.95 |
How the comparison works
Both people start with the same money and spend what they would spend in the other case.
The buyer
Pays the down payment and closing costs, then the mortgage, property tax, maintenance and any condo fees. At the end the home is sold, and the mortgage and selling costs are paid.
The renter
Invests the same down payment and closing costs, then pays rent. The difference between the owner’s costs and the rent is invested each month, or taken out of the investments if rent is higher.
Canadian mortgage maths
Fixed-rate mortgages compound semi-annually under the Interest Act, which is how the payment is worked out.
Why assumptions matter
Home price growth, rent increases and investment returns can swing the answer, so try a range rather than relying on one case.
Comparing the mortgage payment with the rent. The owner also pays property tax and maintenance, and the renter can invest the down payment, so the payment alone says little.
Frequently asked questions
Is it better to rent or buy in Canada?
It depends on how long you stay, the price-to-rent ratio, mortgage rates, home price growth and what you could earn by investing. This calculator shows the result for the numbers you enter.
What does “ahead” mean?
It is the difference between what the buyer would have after selling the home and what the renter would have in investments, at the end of the years you chose.
Why include the renter’s investments?
Money used for a down payment could have been invested instead. Leaving it out would favour buying.
Are my gains taxed?
Gains on a principal residence are usually tax-free, but investment returns can be taxed. The tool leaves out income tax, so use an after-tax return if you invest outside a registered account.
What should I enter for closing costs?
Add the land transfer tax, legal fees and other closing costs. The land transfer tax calculator can give you the first.
Why is the CMHC premium missing?
It depends on your down payment and amortization. Use the CMHC calculator and add it to your costs if you put down less than 20%.
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How we check it
There is no official rent-versus-buy calculator, so the tests use cases worked out by hand: a 0% mortgage, no growth and no return, then each assumption alone (investment growth, home value growth, selling costs, tax and upkeep, rent increases). The mortgage payment itself is checked against the York University example.
The result is only as good as your assumptions. We did not compare it with another rent-versus-buy tool, and it leaves out income tax on investments, insurance premiums and renewals at other rates.