Ghana Home Loans Limited What is preferable? To buy a home with a mortgage or to rent one?

It depends on how long you stay in the property - ie the term shown in the graph. See below for more explanations.

Enter Assumptions:
Initial House value: Mortgage loan amount (<75%): Annual rent as % of house value: Rent reviewed after every: Buying - transaction cost as % of house value: Selling - transaction cost as % of house value: Maintenance as % of value Owned: Rented: Average mortgage interest: Maintenance Inflation rate: House inflation rate: Initial tenant's free capital Net return on tenant's capital:

Change blue figures

$45,000 $30,000 6 2 7 7 2 0.25% 12 5 7 $15,000 8

66.67% % pa years % % % pa % pa % pa % pa % pa % pa
Overall cost - difference

Positive figures mean buying is b

$30,000

$25,000
$20,000

$15,000
$10,000

$5,000
$0

How to use this spreadsheet The graph shows the difference in the total outlay for renting and buying. The buying figures include any profit on the sale of the house after initial buying costs and selling costs. You can enter any assumptions and immediately see whether buying or renting is better.

1 -$5,000
-$10,000

Positive figures on the graph mean buying is better, negative figures favour renting. The results are illustrated as a table and assume the house is held for the term and sold at the end of each year. The graph on the top right display terms up to 15 years and the one below shows 20 years. If the loan is less than the house value, the capital that would otherwise be available to the tenant is assumed to be invested at any growth rate you enter. You will observe that the most sensitive assumptions are the house growth rate and the rent as a percentage of house value. The mortgage debt remains fixed throughout. Interest is assumed fixed although in practise it will fluctuate up and down. Rent however usually increases in line with house inflation, although often delayed. House purchase is normally favourable in the longer term assuming a positive growth rate. Maintenance costs are usually more for the owner rather than the tenant whose landlord may be responsible for some repairs and maintenance. You may vary any parameter each year by amending the table directly. It is better to save the original spreadsheet beforehand to preserve the original standard formulae.