Rent or Buy Calculator
Whether buying beats renting over the years you would stay, counting the money the deposit would otherwise have earned.
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Buying ahead by, at the end
28,453.61
- Buying moves ahead in year
- 7
- Worth at the end, having bought
- 183,001.30
- Worth at the end, having rented
- 154,547.69
- Monthly payment
- 1,201.50
- Cash needed on day one
- 84,000.00
- What the property is worth then
- 365,698.33
- Left after selling and repaying
- 183,001.30
- Cash each side commits
- 264,179.59
Renting stays ahead for the whole period. Try a longer stay, or lower acquisition costs.
Year by year
| Year | Paid to own | Paid to rent | Property worth | Worth: bought | Worth: rented | Difference |
|---|---|---|---|---|---|---|
| 1 | 18,017.96 | 13,200.00 | 306,000.00 | 59,875.44 | 91,337.96 | -31,462.52 |
| 2 | 18,017.96 | 13,464.00 | 312,120.00 | 72,083.59 | 98,632.06 | -26,548.47 |
| 3 | 18,017.96 | 13,733.28 | 318,362.40 | 84,634.49 | 105,875.70 | -21,241.21 |
| 4 | 18,017.96 | 14,007.95 | 324,729.65 | 97,538.49 | 113,061.98 | -15,523.49 |
| 5 | 18,017.96 | 14,288.10 | 331,224.24 | 110,806.30 | 120,183.69 | -9,377.39 |
| 6 | 18,017.96 | 14,573.87 | 337,848.73 | 124,448.95 | 127,233.30 | -2,784.35 |
| 7 break-even | 18,017.96 | 14,865.34 | 344,605.70 | 138,477.83 | 134,202.91 | 4,274.91 |
| 8 | 18,017.96 | 15,162.65 | 351,497.81 | 152,904.69 | 141,084.31 | 11,820.38 |
| 9 | 18,017.96 | 15,465.90 | 358,527.77 | 167,741.67 | 147,868.89 | 19,872.78 |
| 10 | 18,017.96 | 15,775.22 | 365,698.33 | 183,001.30 | 154,547.69 | 28,453.61 |
Most comparisons add up what an owner pays and what a tenant pays and call the smaller one the winner. That quietly ignores two things: the deposit the tenant still has, and the difference in outgoings that whichever side pays less can invest.
Here both sides commit exactly the same cash every year. The one that spends less invests the difference at the return you give. At the end the owner sells. What is compared is what each side is worth — the only comparison where the two columns measure the same thing.
How it works
On day one the buyer pays the deposit and the acquisition costs. The tenant pays neither, so that same amount goes into their investments. Both have parted with the same money.
Each year the buyer pays twelve instalments and the cost of owning; the tenant pays twelve rents, grown by the rate you set. The larger of the two is what both commit that year, and whoever spends less invests the difference.
At the end of the stay the property is worth the price grown at the rate you set. Selling costs come off, the outstanding balance is repaid, and what is left is added to the buyer's investments. The tenant's wealth is their portfolio.
The break-even year is the first year in which the buyer is worth at least as much as the tenant. Before it, the acquisition costs have not been earned back.
Examples
| Case | Input | Result |
|---|---|---|
| A ten-year stay | 300,000 price, 60,000 deposit, 24,000 costs, 3.5% over 25 years, rent 1,100, everything growing at 2%, investments at 3% | Buying moves ahead in year seven, once the acquisition costs have been earned back, and ends the ten years about 28,450 in front. |
| The same purchase with flat prices | The same, with the property value changing 0% a year | Buying never catches up inside the ten years and ends about 34,600 behind. How much of the case rested on that one field is visible in a single edit. |
Frequently asked questions
Why do I have to guess at the appreciation and the investment return?
Because nobody knows them, this tool least of all. Filling them in with a plausible default would hide the fact that the answer turns on them. Put in a range of values and see how far the break-even moves: that spread is the real answer, and it is more useful than any single figure.
Why is renting not simply cheaper every year?
Often it is, and that is the point of the comparison: renting usually costs less month to month, while buying converts part of each instalment into equity. The tool lets the cheaper option invest the difference so that the two effects can be weighed against each other rather than argued about.
Is tax included?
No. Tax relief on mortgage interest, tax on investment returns and tax on a capital gain all exist in some countries and not others, with thresholds and exemptions that change. None of them is invented here. The cost of owning is a field, so a recurring property tax can go in it.
Does this say I should buy?
No. It works out one consequence of a set of assumptions you provided. It knows nothing about how secure your job is, whether you will want to move, or what it is worth to you not to have a landlord — and those decide more purchases than the arithmetic does.
Good to know
- Amounts carry no currency: the answer is in whatever you put in.
- Results use double precision floating point arithmetic. That is exact enough to decide with and is not an accounting record.
- A projection, not a forecast. Every rate is applied unchanged for the whole period, which no real market has ever done.
- The figures are nominal: nothing is expressed in today's money. If you want to read them in real terms, enter rates net of inflation throughout.
- A repayment loan at a fixed rate is assumed, and the rent is assumed to be for a comparable home. Comparing a small rented flat with a large bought house measures the difference between the two homes, not between renting and buying.