This rent calculator estimates your affordability on rental fee, meaning how much rent you can pay by considering your annual income and your current monthly debts. There is in depth information on how this calculation works below the form.

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## How does this rent calculator work?

This is a tool designed to help when trying to estimate the maximum rental fee you can afford to pay on a monthly basis by taking into account your financial status.

Before explaining the formulas behind it, let's discuss few things to look for before deciding your next move. Finding a place to move in such way to cover all the needs within the budget is a hard mission. City centre houses are too expensive while they may seem attractive due to the savings you can make (for time and transport costs), while houses out of the city centre are easy to find but they may prove unattractive due to higher transport’s costs, or due to streets and areas not that friendly. So, which decision to make? Here’s what you need to take account of:

• your monthly rental payment should not represent more than 30-35% from your monthly income;
• keep an eye on all your fix costs and debts that you should pay for on a regular basis;
• try to save as much as you can your transport costs by choosing a home near to your working place where applicable;
• try to save as much as you can on your installing costs in the new home;
• keep an eye on your monthly income as this is the key for financing your stay;
• when planning your monthly budget please consider all the housing costs not just the renting, such as: home utilities, telephone bill, insurance.

The algorithm behind this rent calculator applies the formulas explained here, that display the recommended levels to pay:

• Maximum rent allowed per month should not reach 35% from your monthly salary = (Monthly salary * 0.35) – Your monthly debts.
• Lower limit of rent per month = (Monthly salary * 0.25) – Your monthly debts.
• Upper limit of rent per month = (Monthly salary * 0.30) – Your monthly debts.

## Example of a calculation

In case of an individual earning \$65,000 a year, while having a current monthly payment on an auto loan of \$500 will recommend these figures:

By taking account of your monthly salary of \$5,416.67 and your monthly debts of \$500.00 you can afford a monthly rental fee up to \$1,395.83. This rental fee represents ~35% of your monthly salary, which is the highest percentage limit that practice says it can be allocated for paying rents.

More indicated would be to keep your monthly rent between \$854.17 and \$1,125.00.

Many people are experiencing the same problem or question, when discussing about their own home: Should I rent or should I biy my own house? Well, that depends on the financial affordability and an some perspectives. Here's a short list of what to analyze whether to rent or buy:

• Is the monthly rental fee equal or even higher than a monthly mortgage loan payment? In case it is, it is recommended trying to buy your own home and vice versa.
• Are there any perspectives of a more pronounced increase in renting costs than the potential increase in mortgage interest quotes? If yes then buying your own home may also be a right move.
• How higher are the costs associated with owning a property in comparison with having a rented one? Many get surprised not by the mortgage payments, but by the costs that came up with the home itself. For instance: property taxes, insurance costs, maintance costs and so on.
• Is your job stable or do you have a stable income source? If yes you may take a loan, otherwise the rent is preferable?
• Are there any perspectives that your regular income to increase? If yes, then planning to buy your own house may be better as you will actually afford to payout.
• Are there any family plans that require a preffered location (children school, work place) temporarly or definitely? If there are temporarly plan then you may find it easily to rent than to buy a property in a desired location to live in for just a few years. Otherwise you may think of buying one.

12 Feb, 2015 | 0 comments