Why “rent vs. mortgage payment” is the wrong comparison

The most common mistake is comparing your monthly rent to a monthly mortgage payment. Owning a home comes with costs renters never see — property tax, home insurance, maintenance, and the closing costs to buy and eventually sell. But owning also gives you something renting never does: every mortgage payment pays down your loan, and over time the home itself usually grows in value. When you sell, that equity comes back to you.

So the real question isn’t “which is cheaper this month?” It’s “after a few years, which leaves me better off?”

Running the numbers for St. John’s

Here’s an example using the starting assumptions in our Rent vs. Buy Calculator: a $375,000 home with 10% down and a 5% mortgage over 25 years, compared with renting a similar home for $1,950 a month. It assumes rent rises 3% a year and the home appreciates 3% a year, and it counts property tax, insurance, maintenance, closing costs, and the cost of selling at the end.

  • In year one, owning costs more each month — about $2,696 all-in (mortgage, tax, insurance and upkeep) versus $1,950 in rent.
  • Buying takes about $45,000 up front — your down payment plus closing costs.
  • By about year 4, buying catches up. That’s the break-even point.
  • After 10 years, the net cost of buying (after what you’d walk away with if you sold) is about $156,000, compared with about $268,000 spent on rent — roughly $112,000 in buying’s favour.

Change one input and the picture shifts. If a comparable rental costs $1,700, break-even moves to about year 5; at $1,500, about year 6. That’s why the right answer depends on your situation — and why it’s worth plugging in your own numbers.

What the St. John’s rental market looks like

Rentals here aren’t sitting empty. CMHC’s October 2025 rental market survey put the vacancy rate for purpose-built apartments in the St. John’s area at about 2%, and rents have kept climbing. A tight rental market tends to mean steady rent increases, which works in buying’s favour the longer you stay. (Newfoundland and Labrador doesn’t cap how much rent can go up, though a landlord can only raise it once a year, with notice.)

When renting makes more sense

  • You might move within three or four years — a new job, a growing family, or you’re just not sure where you want to settle.
  • You’re still building your down payment and an emergency fund.
  • You’re new to town and want to get to know the neighbourhoods first. There’s no harm in renting while you figure out whether you’re a downtown, Mount Pearl or Paradise person.
  • Your income is in flux, or the up-front costs would leave you stretched thin.

When buying makes more sense

  • You plan to stay five years or more.
  • Your income is stable, and your down payment and closing costs are set aside.
  • You’d rather your monthly payment build equity than go to a landlord.
  • Comparable rents in the area you like are close to — or above — the all-in cost of owning.

A few honest caveats

Any calculator is only as good as its assumptions. Ours uses Canadian semi-annual mortgage math and CMHC insurance rules, but it doesn’t model investing your down payment elsewhere, and it assumes steady rates, appreciation and rent growth — real life is bumpier. Treat it as a starting point, not a verdict.

If you’re weighing it up, try the calculator with your own numbers, then reach out. Our team is happy to walk through what you’d actually pay for the kind of home you have in mind — including closing costs and the programs available to first-time buyers.

Source: rental vacancy from CMHC’s Rental Market Report (October 2025 survey).