One of the most difficult decisions that many of us have to make when we choose to fly the nest is whether we should purchase our own home or rent a property until our financial affairs are in a better state. Well, if you need a little help in making your decision, you’ll be pleased to hear that there is an iPhone app that can aid you to the perfect resolution.
Mortgage or Rent
The app has been aptly named “Mortgage or Rent” and will help you to reach the right decision, as to whether you should you should invest in real estate or wait until a better opportunity arises.
- Download the app
- Enter the purchase price of a property you would potentially like to buy.
- Enter a rental figure that similar properties would cost.
- Enter a third of your monthly income, which is typically what mortgage lenders estimate should be your disposable income on a monthly basis.
- Enter the amount of savings you have that you would use as a deposit.
These are the initial “personal” details you will need to enter, then you will be required to input information pertaining to your mortgage loan, including:
- The amount of money you will require for mortgage-related taxes and insurances.
- The interest rate at which your mortgage loan has been offered.
- The expected rate of inflation during the term of your loan, typically over 10, 15, 20 25 or 30 years.
Two Possible Scenarios
You will then be presented with two possible scenarios:
- Firstly, the app will look at a mortgage. All your savings will be put into a deposit on your loan and the majority of your disposable income will be used within your monthly mortgage payment.
- The second scenario will invest your savings into an account which yields an interest rate comparable to the rate of inflation. It will then use a portion of your disposable income towards rent, whereas the rest will again be invested.
You will then be presented with two graphs showing your balances over the following ten years. The red graph will calculate your increasing property value compared to your decreasing mortgage loan amount – whereas, the green graph will calculate the value of your investments over the same 10-year period.
The app also allows you to make calculations based on differing values of inflation. Remember the value of property can go down as well as up, and your salary is likely to increase over the 10 years as well. You have the ability to manually input both property value and income figures, thus giving you a true reflection of what might occur over time.
The Mortgage or Rent App
The app is free and compatible with iPhone, iPad and iPod Touch and will require an operating system of iOS 3.0 or later. The tool is specifically aimed at helping you reach your decision on whether a mortgage or renting is more financially viable for you at this precise moment in time.
Today’s guest author, Bob Peters, is a broker working for Benson Mortgages, leading mortgage lenders in Toronto. He is an avid tech blogger and has a large number of loyal readers on various online blogging platforms.