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Rent vs Buy calculator

Compare wealth under each path — renting and investing the deposit, versus buying and building equity.

Calculator compare

Logic updated April 2026

This calculator compares two wealth paths over a chosen time horizon: renting and investing the would-be deposit (plus any cash-flow surplus) at an assumed return, versus buying with a deposit and a mortgage. It builds a year-by-year cash-flow comparison and tracks property equity, the rent and buy total cost, and the year buying breaks even with renting.

How this is calculated

Formula 

buyEquity = propertyValue − remainingMortgage ; rentWealth = (deposit + cumulativeCashflowSurplus) × (1 + r)^years ; breakeven = first year buying-net-cost ≤ renting-cost

Step-by-step

  1. Compute the deposit (purchase price × deposit %) and loan amount (purchase price − deposit)
  2. Calculate the monthly mortgage payment via standard amortisation, then build the full payment schedule
  3. For each year, walk forward: appreciate the property at the appreciation rate, amortise the loan to that year's remaining balance, escalate property expenses by the appreciation rate, and escalate rent by the rent-growth rate
  4. For renting, compound the deposit at the investment return rate; if the renter's monthly costs are lower than the buyer's, invest the difference each year too
  5. Track end-of-year wealth under each scenario: buy = property value − remaining mortgage − cumulative cash-out, rent = invested deposit + cumulative invested surplus
  6. Identify the break-even year (first year cumulative buying cash-out, net of equity, falls below cumulative rent paid)
Rounding mode
ROUND_HALF_UP
Precision
20-digit internal precision (Decimal.js), rounded to 2 decimal places for display
Logic last reviewed

Assumptions & limitations

What this calculator assumes

  • Fixed mortgage interest rate for the full loan term
  • Deposit is paid upfront from investable cash
  • Property expenses escalate proportionally with property value each year
  • Renter invests the deposit and any cash-flow difference at the stated return rate
  • No transaction costs, taxes, or insurance modelled beyond the stated expenses
  • Property appreciation and rent growth compound annually

What this calculator doesn’t account for

  • Does not include stamp duty, conveyancing, or property purchase taxes — these favour renting in early years
  • Does not include selling costs (agent commission, marketing) on the property at end of period
  • Does not model rental vacancy or maintenance shocks
  • Does not factor in tax effects (rental yield tax, capital gains, deductible interest)
  • Does not model rate changes during the mortgage term
  • Assumes the renter actually invests the surplus — behavioural reality often differs

Worked example

A buyer compares renting at $2,500/month vs buying a $600,000 property with 20% deposit, 6.5% mortgage over 30 years, 3% property appreciation, 3% rent growth, and a 7% investment return on the renter's invested deposit and surplus, over a 10-year horizon.

Input Value
Property price $600,000
Deposit 20% ($120,000)
Mortgage rate / term 6.5% / 30 years
Monthly rent $2,500
Property appreciation 3%/year
Rent growth 3%/year
Investment return 7%/year
Comparison period 10 years

Buying breaks even with renting around year 7. Year 10: buyer wealth ~$300,000 of equity; renter wealth ~$240,000 of invested capital.

In the early years, the renter benefits from investing the deposit at 7% while the buyer is heavy in mortgage interest. By year 7 the property's appreciation plus principal paydown overtakes the renter's investment growth. By year 10 the buyer is ahead by roughly $60,000 in this scenario — but flip the assumptions (8% returns, 1% appreciation, higher rates) and the renter typically wins.

Frequently asked questions

Is it cheaper to rent or buy?

There is no universal answer — it depends on the property's purchase price relative to local rents, the mortgage rate, expected appreciation, your investment return on alternatives, and how long you'll stay. As a rule of thumb, buying tends to win for stays of 7+ years in markets where rent yields are below 4% and rates aren't unusually high. Use this calculator with your specific numbers.

What costs does this calculator include?

On the buying side: deposit, mortgage payments (principal + interest), and the property expenses you enter. On the renting side: rent (escalated annually), opportunity cost of the deposit, and the investment growth on the deposit and any cash-flow surplus. Excluded: stamp duty, conveyancing, agent fees on sale, and tax. The exclusions tend to favour buying in this calculator's results.

How does opportunity cost factor in?

The deposit you'd pay to buy could instead be invested. If markets return 7% and your property appreciates at 3%, the renter's invested deposit is growing faster — that gap is the opportunity cost of buying. The calculator captures it by tracking the renter's invested deposit plus any monthly surplus through the comparison period.

When does buying break even with renting?

The break-even year shown in this calculator is the first year your cumulative buying cost (after subtracting equity) drops below your cumulative rent paid. In typical inputs that's somewhere between year 5 and year 12. Earlier break-even means buying is the clearer choice; later means renting and investing the difference is competitive over the period you'll stay.

What happens if I sell before break-even?

Selling before break-even means the transaction costs and lost mortgage interest aren't recovered by appreciation and equity build-up — you'd typically have done better renting and investing. This calculator doesn't model sale costs explicitly, but agent commissions and conveyancing on exit usually push break-even another 1–2 years out, so plan to stay well past the calculated break-even before buying makes sense.

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