Methodology & assumptions
Immobascule compares the net worth of two paths — buying, or renting and investing the difference — starting from the same cash on hand. Here is exactly how the numbers are computed, and what the model does not do.
The principle
Both scenarios start from the same money available today. The renter keeps it all invested; the buyer puts part of it toward the down payment and closing costs, and invests the rest. For each year we compute:
- Buyer's net worth = net resale equity (property value − selling costs − mortgage balance) + their investment portfolio (after tax);
- Renter's net worth = their investment portfolio (after tax).
The gap between the two is the verdict, and the year buying catches up to renting is the break-even point.
The mortgage
- Semi-annual compounding — the Canadian standard for fixed-rate loans (not monthly), applied exactly.
- Payment computed with the annuity formula over the chosen amortization; the balance does reach $0 at the end.
- Tiered renewal option: a different rate at each term (e.g. "what if rates rise at renewal?"), recomputed on the remaining balance.
The down payment and the CMHC premium
Legal minimum (Quebec/Canada): 5% of the price up to $500,000, 10% on the portion from $500,000 to $1.5M, 20% above $1.5M. Both cash and the HBP (RRSP withdrawal) count toward the down payment; if the total entered is below the minimum, it is raised to that floor.
Mortgage loan insurance premium (CMHC) when the total down payment is under 20%, by loan-to-value tier, then added to the loan balance (the QST on the premium is paid in cash):
| Down payment | Premium (on the loan) |
|---|---|
| ≥ 20% | 0% |
| 15% – 19.99% | 2.80% |
| 10% – 14.99% | 3.10% |
| 5% – 9.99% | 4.00% |
A 0.20% surcharge is added to the rate above when the amortization exceeds 25 years (insured 30-year mortgage).
The welcome tax (transfer duties)
Computed by bracket on the price, per the municipal schedule (thresholds indexed annually; some cities apply a higher rate on the upper portion). The thresholds and rates are editable in the calculator. Notary, inspection and selling costs are entered separately.
First-time buyer credit (2026, optional): deducts the Quebec refundable tax credit — 100% of the first $5,000 of transfer duties, then 25% of the excess, up to $5,875 — for a first-time buyer (both non-owners for 4 years). Limited to properties under $1M (phased out from $750,000 to $1M). The credit is paid at tax filing; it is modelled as a reduction of the purchase cost.
Investing and taxation
- The renter invests the starting capital plus the monthly cost difference versus the buyer (or a fixed amount of your choice).
- Annual return is entered after tax by the user; a capital gains tax can be applied at liquidation.
- HBP: the RRSP withdrawal for the down payment is modelled; its repayment (1/15 per year over 15 years, interest-free) is treated as neutral.
- The capital gain on a principal residence is tax-exempt.
Horizon
The projection covers the amortization plus a chosen number of years after the mortgage ends, to show the long-term effect.
What the model does not do (stated limits)
- Constant return: no volatility or "sequence-of-returns risk" (bad years early on). A Monte-Carlo view is available separately.
- Nominal dollars: an optional "today's dollars" switch deflates future amounts; otherwise figures are nominal.
- Simplified investment taxation: tax applied at liquidation; no fine TFSA / FHSA / annual-tax modelling.
- Municipal data to confirm: featured cities have adjusted values; others use estimates — verify for your municipality.
- One-off costs not modelled: special condo assessment, major repairs, moving.
Results are educational estimates. They rely on the numbers you provide and on purely financial considerations — not on your personal preferences.
Sources and references
- Canada Mortgage and Housing Corporation (CMHC) — loan insurance premiums and down-payment rules.
- Municipal transfer-duty ("welcome tax") schedules of Quebec cities and provincially indexed thresholds.
- Institut de la statistique du Québec — municipal populations (city selector).
- Tribunal administratif du logement — rent-increase guidelines.
- Canadian semi-annual compounding standard for fixed-rate mortgages.
Immobascule does not provide financial, tax or legal advice. This tool is provided for educational and informational purposes; consult a professional about your situation before making any decision.