I was interested in understanding the difference in cost overtime with renting versus a mortgage. I created this first version of a Google Sheet to better understand the arguments.
Check it out and would love to hear some feedback on how to improve it and make it more realistic.
I'm pretty new to Google Sheets so not sure of the exact capabilities of it yet.
Mortgage interest of 6% per annum is ridiculously high. Not only would I hope to never have to pay that, it would definitely not be anywhere close to the average interest rate.
2% savings interest is very low given this seems to be about building up life savings, so assume the bulk of that is invested rather than left to devalue in a deposit account.
With a more realistic interest rate and investing your savings, you would not want to put 120K cash into the property, but the 40K deposit that would be required.
You have not factored in the rental increases one can expect over the next 40 odd years
You have not factored in the property price increases one can expect over the next 40 odd years
You have not factored in the maintenance of the property over the 40 years
You have not factored in moving/extending property at any stage (this assumes the person is there for the rest/bulk of their life)
You have not factored in salary changes over the 40 years (or changes to the living expenses as you go through various life stages)
You have not factored in Pensions. Given the time period and the subject matter, this is critical, as a person ahs very different pension needs depending on whether they own their home or not.
You have not factored in inflation (given the time period you are talking about, inflation is very significant)
Pretty much all of the above are very difficult to predict, but you still need to cater for them, make assumptions clear and allow them to be easily tweaked to see how a change to even one of them can have a huge impact on the overall results.
@captainfarkus Thanks for feedback, I definitely want to implement some of these into the sheet.
For this initial version I was focusing on getting the bare minimum and looking at the simplest case.
@aybuqui How many years are you renting so far in your life?
Personally I rented for 16 years-ish, and maybe moved apartment/house 7-9 times. If there is one thing I learned in those 15 years is that rent is not flat rate, it only goes in one direction which is up. 1500 a month right now in rent is much more likely to be 3000 a month in rent in 10-15 years.
