Rent vs buy is a cash-flow and timeline problem wearing lifestyle clothes. This walkthrough builds a 10-year comparison with selling costs included. For a shorter move horizon, use the separate five-year example: rent or buy if you may move in 5 years.
The question
After about 10 years, which path leaves more flexible net wealth: owning and then selling (after costs), or renting and investing the down payment plus the monthly ownership premium?
Stability, school districts, and renovation desire matter—but price them after the spreadsheet, not instead of it.
Shared assumptions
- Home price today: $550,000
- Down payment: 20% = $110,000 (same cash available to the renter as investable capital)
- Mortgage: $440,000 at 5% interest, 25-year amortization → payment ≈ $2,572/month
- Other ownership costs (tax, insurance, maintenance, condo fees if any): $700/month flat for simplicity
- Comparable rent: $2,200/month (also flat — real rents change)
- Home price growth: 3%/year
- Invested money return: 6%/year compounded monthly (before tax)
- Selling costs when the owner exits: 5% of sale price (commission + related costs, stylized)
- No land transfer tax, CMHC premium, or renovation shocks in the base case (add them when you run your city)
Total owner housing cash each month ≈ $2,572 + $700 = $3,272. That is $1,072/month more than rent.
Path 1 — Sam buys
After 10 years of payments under these assumptions:
- Remaining mortgage balance ≈ $325,300
- Principal paid ≈ $114,700
- Home value at 3%/year ≈ $739,200
- If Sam sells: costs ≈ 5% × $739,200 ≈ $37,000
- Cash left after paying the mortgage and selling costs ≈ $376,900
That ~$376,900 is Sam’s flexible wealth from housing in this model (ignoring moving friction and taxes on other accounts).
Path 2 — Alex rents and invests
Alex keeps the $110,000 invested and also invests the $1,072 monthly ownership premium that Sam pays above rent.
- After 10 years at 6%: portfolio ≈ $375,800
Under these assumptions, Alex and Sam finish in a near dead heat on flexible wealth (~$376k vs ~$376k).
What the near-tie means
With a full decade, 20% down, moderate appreciation, and a renter who truly invests the difference, owning is not an automatic financial win. The “forced savings” of a mortgage is real—but so is the opportunity cost of the down payment and the extra monthly cash ownership requires.
Change one input and the winner flips:
| If this changes… | Direction |
|---|---|
| Appreciation 3% → 4%/year | Helps the buyer |
| Invested return 6% → 7%/year | Helps the renter |
| Sell after 5 years instead of 10 | Usually helps the renter (selling costs + less principal paid) |
| Renter never invests the difference | Buyer’s forced savings win by default |
| Large land transfer tax / closing costs up front | Raises the bar for buying to “win” |
Canadian costs this base case left out
- Land transfer tax / property transfer tax — can be a large day-one cost depending on province and city.
- Mortgage default insurance — if the down payment is under 20%.
- Stress-test / minimum qualifying rate — federally regulated lenders apply a higher qualifying rate than the contract rate for many mortgages. You may afford the payment on paper but not qualify under the test. Confirm the current framework with OSFI (and your lender).
- Condo fees and special assessments — can blow past a flat $700 assumption.
Add those lines before treating any blog example as your answer.
Common mistakes
- Comparing mortgage payment to rent and ignoring tax, maintenance, and fees.
- Counting home appreciation as profit without subtracting selling costs.
- Assuming the renter invests the difference when lifestyle would spend it.
- Using a 10-year model when you may relocate in three years.
When buying still makes sense even if the sheet is close
If you value payment stability after renewal planning, want to reshape the home, or would not invest the rent-vs-own gap reliably, ownership can be the better life fit even when the 10-year wealth gap is small. Just do not pretend the spreadsheet said something it did not.
Run your own price, rate, rent, and horizon in the Rent vs Buy Calculator. For the short-horizon case, read the five-year move example. For the broader path, see the Rent vs Buy Guide.
Primary sources
OSFI minimum qualifying rate for Canadian mortgage-qualification context. Alex and Sam’s prices and returns are teaching assumptions.
Disclaimer: Educational illustration only — not financial, tax, or real-estate advice. Local rules, lending criteria, and markets vary.