Ethan has asked some questions via private messaging.
But I will continue answering here.
First I need to try and explain the numbers that my conclusion is based on.
For both renting and buying this person began with $112,000
The rest, rent and repayments was paid for out of future earnings.
The figures below relate to what this person has after 3 years. (This in effect is what the original $112,000 has becomes.)
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Renting: $112000 + interest on the term deposit - rent = $45,260
The amount has decreased because the cost of the weekly rent is more than the interest that is being earned on the term deposit. So this person has gone backwards he has less than he started with.
Renting Balance after 3 years = 131,060-85800= $45,260
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Buying: This person will have some equity in his home. If he sells it he can expact to 'realise' $168,923. The rest will go to the bank to finish the loan. However there have been some expenses along $12000 of expenses along the way so this will have to be deducted. (Just like the rent was deducted)
Buying Balance after 3 years = $168,923-$12000 = $156,923
So after three years if your rent then your saving of $112000 has reduced to $45,260
and if your buy then it has increased to $156,923
Is that a bit clearer now?
I think you sorted out the interest bit yourself? And yes our answers should be the same. 