Buying versus Renting

With todays interest rates buying a home is more affordable than anytime in recent memory. Consider this scenario:


  • Currently in Kelowna you can rent a 3 bedroom, 2 bathroom house with a detached garage for approximately $1200. Assume that rent will increase by 3% per annum after 10 years this home will rent for $1565/month. After 25 years, over $2440/month!
  • Now even if rent did not increase for the first 5 years the rent for the first year would be $14,400. Over 5 years rent paid would be $72,000. The total equity the renter would earn would be $0.00
  • The same home can be purchased in Kelowna today for approximately $340,000. Assuming a down payment of $40,000 and interest rates as low as 2.89% the monthly payment would be $1405 with an annual payment of $16,680. Over 5 years the total payments would be $84,300.
  • The difference adds up to be $12,300 cheaper in favour of the renter over the 5 year term. However! The mortgage would have some principal repayment over those 5 years, $44,040 to be exact. So in fact the homeowner is $31,740 better off than the renter
  • Now assume a 3% increase in property value, the home worth $340,000 today would be worth $357,000 in 5 years time giving the homeowner an additional $17,000 in equity making them $48,740 better off than the renter
  • If you were to run the numbers out for the full 25 years the difference is over half a million dollars!


Play with the numbers yourself and notice how you're paying off more principal than interest after only one year of paying your mortgage! Amortization Calculator 

Nick Latondresse

Nick Latondresse

CENTURY 21 Assurance Realty Ltd.
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  • Senior Real Estate Specialist