clever finance widgit for rent vs. buy debate?

[BERGS2]

though i'd have a go - (sparked by debate with some friends this weekend) - at creating a spreadsheet detailing the returns to opting 'in' or 'out' of the housing market in the medium term.

variables are:

cost differentials of renting & buying

Cost of borrowing £450k around £3000/month
Cost of renting said £500k house around £1500/month

Annual Interest Rate
RPI Inflation
Rent Inflation
Investment returns (for the rent model)

i got it so after 25 years the house would be worth about 700k in todays money bought outright - vs renting and saving the difference netted about £350k, so the best long term position would be to have bought.

these are based - IIRC - on 6% average interest rate, about 3% inflation and about 4% net return to savings...

given that my attempt is crude and dirty - are their online tools for said calculations to see how various scenarios pan out?

Though long term renting would obviously be trounced by homebuying from say 1992 - 2007 in terms of return - i'm not so sure that 2009-2024 will be so clear cut....

anyone got a view?

anyone got a widgit?

Anyone actually read this part of the forums these days?

BERGS.

Edited by BERGS2 on Monday 6th July 13:19

[BERGS2]

was more a technical tool that collated the various factors -

bit like these really:

http://www.drcalculator.com/calc/savings.html

http://www.drcalculator.com/calc/smoking.html

[BERGS2]

NoelWatson said:

BERGS2 said:

RPI Inflation

Why are you using RPI rather than wage inflation?

just wanted a close proxy for the increase in cost of living, but i guess wage inflation would negate the increase... but the mortgage payments would remain fixed i suppose...

as i say, any help in modelling this would be greatly appreciated!

BERGS