On the first year, the total repayment is RM1,705 x 12 months = RM20,460
And the interest breakdown for first year is RM11,315 + maintenance fee RM242 x 12 month = 2,904
First year interest + maintenance fee = RM14,219
If the rental is RM1,600 x 12 months = RM19,200 and this amount is actually covers both interest payment and also maintenance fee RM14,219. So number wise, just need about 4 years, buying is cheaper than rental and we could earn back some money if we manage to sell it back with the same price we bought.
Why sell same price after 4 years? Of course no! Just a conservative estimates to tell the story is this worth buying.
If we sell higher, means we earn more instead of break even compare to rent, and renting is forever with the price will increase over years, but mortgage repayment won’t.
In fact, what happens to the principal payment and the interest payment is that every year, the interest portion gets smaller while the principal gets bigger. The principal actually the capital which belongs to owner. Interest payment belongs to the bank. So, as long as the rental covers interest fully and the balance is contributed to the principal, the tenant is making the owner richer every month, slowly.
What happens if OLDER buyer?
For age above 35 years old, the maximum loan period may only have 70 years old - their age which is lesser than 35 years.
Example a 45 years old buyer, then the maximum loan period is 25 years only. The calculation are the following:
The monthly repayment is RM1,802 per month + RM242 maintenance fee = RM2,044 per month.
First year, the total repayment is higher amount at RM24,528