The Cost of Waiting: A Worked Example on Delaying a Purchase

Waiting to save a larger deposit has a cost that is rarely calculated. A comparison across a two year delay.

Waiting is usually treated as the cautious choice and therefore as free. It is neither free nor automatically cautious, and the calculation below makes the trade-offs visible on a specific set of assumptions.

The situation

A buyer is deciding whether to purchase now with a smaller deposit or to wait two years, save more and purchase with a larger one.

Assumptions (illustrative)

• Property price today: SAR 750,000.
• Deposit available now: SAR 150,000.
• Additional savings achievable over two years: SAR 120,000.
• Current rent paid: SAR 4,500 per month.
• Assumed property price movement: 4 per cent per year.
• Assumed financing cost: 5 per cent per year.
• All figures are illustrative assumptions used to demonstrate the method.

Step 1: Buying now

Financing SAR 600,000 at an assumed 5 per cent costs about SAR 30,000 in the first year, while rent of SAR 54,000 per year ceases.

The comparison is not financing cost against zero. It is financing cost against the rent you would otherwise continue paying.

Step 2: Rent paid while waiting

SAR 4,500 multiplied by 24 months equals SAR 108,000.

This is spent and unrecoverable, and it is nearly as much as the additional deposit accumulated during the same period.

Step 3: Property price after two years

SAR 750,000 at 4 per cent per year reaches approximately SAR 811,000.

The larger deposit buys into a more expensive property, which absorbs much of the benefit of having saved it.

Step 4: Position after waiting

Deposit SAR 270,000 against a price of SAR 811,000 means financing SAR 541,000.

The amount financed is lower, which is the benefit. It cost SAR 108,000 in rent to achieve.

Step 5: Comparing the two positions

Buying now finances SAR 600,000 with no rent paid. Waiting finances SAR 541,000 having paid SAR 108,000 in rent.

The reduction in financing of SAR 59,000 cost SAR 108,000 in rent, before considering that you have also owned an appreciating asset for two years in the first case.

Step 6: Where waiting wins

If prices were flat or falling, or if the additional deposit unlocked materially better terms, the calculation could reverse.

Waiting is not always wrong. It is wrong when it is chosen without calculating what it costs.

What changes the answer

• Flat or falling prices substantially improve the case for waiting.
• Living without paying rent, such as with family, removes the largest cost of waiting.
• If the larger deposit moves you into a materially better financing tier, the benefit is larger than the simple arithmetic suggests.
• If your income is likely to rise significantly, waiting may improve both the deposit and the assessed capacity.

What the numbers tell you

• Count rent paid while waiting as a cost of the decision to wait.
• Test the decision against price movement in both directions rather than assuming stability.
• Check whether a larger deposit changes the terms available, since a tier change can justify waiting.
• Make waiting a decision rather than a default produced by uncertainty.

Limits of this example

Every figure above is an illustrative assumption used to show the method, not a quote, valuation or market rate. Costs, rates, fees and regulations change and must be confirmed with the relevant authority, lender or supplier before you commit.

If you are weighing a financing decision, Domira can review the offers, model the total cost and stress test the obligation with you before you sign anything.