Rent vs Buy Calculator
Calculate whether it is cheaper to rent or buy a home. Simulates mortgage amortisation, property appreciation, tax, maintenance.
Buying & Renting Parameters
Financial Verdict & Net Wealth
Over a 7-year horizon, purchasing creates substantially more net wealth through home equity and appreciation than renting and investing the deposit.
⚖️ Decision Verdict: Break-Even at Year 4
If you stay for less than 4 years, renting is cheaper due to buying transaction fees (stamp duty, survey, legal) and estate agent exit costs. Beyond 4 years, equity buildup and capital appreciation overcome initial overheads.
Multi-Year Simulation Breakdown
About this tool
How to use it
- Enter your prospective purchase home price, down payment percentage, mortgage interest rate, and loan term.
- Input your expected annual home appreciation and maintenance/property tax rate.
- Enter the equivalent monthly rent, anticipated annual rent inflation, and your investment rate of return.
- Set your planned time horizon (how many years you intend to live in the home).
- Review the calculated Break-Even Year and projected net wealth comparison.
Why it matters
The decision to rent or buy is rarely just a comparison of a monthly mortgage payment versus monthly rent. Homeownership incurs heavy upfront transaction costs (stamp duty, survey, legal fees), ongoing non-recoverable costs (mortgage interest, property tax, maintenance), and selling exit broker fees. Conversely, renters who invest their saved down payment into diversified equity index funds benefit from compounding market returns. Simulating both paths reveals the exact year where capital appreciation and equity buildup overcome initial buying overheads.
When to use it
Use this calculator before house hunting, when debating whether to renew a lease or enter the property market, or when relocating to a new metropolitan area.
Good to know
Opportunity Cost: The key variable many buyers overlook is the opportunity cost of the down payment. Capital tied up in home equity cannot compound in equities or bonds.
Common questions
What is the break-even year in rent vs buy?
The break-even year is the exact point in time when the cumulative net wealth gained from buying a home (equity + appreciation minus mortgage interest, taxes, maintenance, and exit selling fees) exceeds the accumulated wealth of renting while investing the deposit.
Why is renting often better for short time horizons?
Upfront closing costs (2% to 4%) and selling costs (4% to 6%) take several years of mortgage principal amortization and home appreciation to recoup. If you move within 1 to 3 years, transaction costs almost always make buying costlier than renting.
What is the 1% home maintenance rule?
A widely accepted real estate rule of thumb recommends budgeting roughly 1% of your home's total market value each year for routine repairs, servicing, and long-term maintenance (e.g. roof, boiler, appliances).
Does this calculator account for rent inflation?
Yes. Rents historically rise with inflation over time (typically 3% to 4% annually), whereas a fixed-rate mortgage principal and interest payment remains identical every month for the life of the loan.
What happens if home prices fall?
You can adjust the home appreciation slider to 0% or negative rates. When property values stagnate or fall, renting and investing capital in liquid markets becomes significantly more advantageous.