Environment upgrade part 2: Rent Vs Own

Part of the series: Environment upgrade

This is my third move in the city of Montréal. And, as a believer in the “3 times is a charm” motto, I was motivated to make this final move more permanent. Which is when I chanced upon a mortgage calculator that told me the monthly payment for $100 000 is around $500. I thought “Great, it’s just like paying rent except I can sell the condo and take my money back.” This is the hook that got me digging more into the concept of owning my own condo.

At first, I surfed around and used available calculators online to compare the great theory of rent vs own. www.canadamortgage.com is the site I went to. However, I found some strange bug in the calculator when I try to compare best and worst scenarios where my investment can bring in 10% annual return. The result isn’t that much different from that of a 5.25% annual return. So I gave up using the premade calculator. It is either bullshitting, trying to push for people to buy home or crappy coding.

In any case, I can’t trust these calculator so I made my own excel spreadsheet. I found and tested most of the formula to calculate mortgages from this website: http://www.hughchou.org/calc/formula.html. Which allowed me to understand a few principles. On average it’ll go up 6%. 10 year cycle and the tendency for the price to bubble in predictable ways.

It is the worst kind of investment possible as I previously calculated. I didn’t believe that buying a house is as shitty as the random calculation I did. But it is true. Agent fee at %6, inflation at 2%, mortgage at 5%, Tax at 2% and condo fees. The tax itself is equal to my current monthly rent. Who are we bullshitting that we are earning money?

In the end, my biological clock won the debate. Add that to the fact that my current growth is stunted by the restriction in space and having to put up with other’s lifestyle. I proceeded with getting a mortgage specialist to have my pre-approval done.

With that, and a new found resolve, I began my research on the housing market…