How To Halve Your Rent – Buy
Buying your own property can as much as halve your “rent”, here is how:
I’m going to use an example of two units we currently have i) A Tala Tower (Reem Island) two bed apartment and ii) a three bed on Reef – both for sale at 2m, currently rented at 150K per year. I will assume a buyer with a 25% deposit (500k) with 1.5m financed at 4% over 25 years. If you would like this article for any other unit please let me know and I’ll send you the break-down.
Lower “Rent” – Your rent on this unit is 150k per year if you are a tenant. If you buy it your mortgage repayments would be 95K per year. A saving of 55K per year or 37%, the difference between being a tenant and an owner. It gets better ….
Paying Down Equity – When you rent your money goes straight into your landlord’s pocket and you get to stay in his property for another year. If you own your property then in the first year 35K of your 95K payment to the bank for your mortgage goes to paying off the principal of your loan (the other 60k is interest payments). This is money essentially going into your pocket as it is taken off the amount you owe, so if you sell the unit at what you bought for you get to keep this amount.
So in lower “rent” you save 55K and paying down equity you add 35K. Factor in about 15K for service charges and your total saving per year is 75K or 50% of your total rent. If you buy you halve your rent.
If you doubt my figures go to http://www.mortgagecalculator.org and use the yearly amortization schedule.
Call – +971 50 6145199