Rent vs Buy Calculator
Compare the financial costs of renting versus buying a property. See total costs, equity build-up, and property appreciation based on your inputs.
Our free calculator helps you make an informed decision by comparing the long-term financial implications of renting versus buying. Enter your property details, rental costs, and assumptions to see a detailed year-by-year breakdown of costs, equity build-up, and net worth differences.
Disclaimer: This calculator provides illustrative estimates only and does not constitute financial, legal, or housing advice. Results depend on assumptions and may not reflect actual costs. Always verify figures independently.
Home Purchase
Home Rent
Assumptions
Leave at 0 if mortgage interest is not tax-deductible in your area
Comparison Results
Cost Comparison
Buying Shows Lower Costs
Based on your inputs over 5 years
Monthly Costs
Total Costs (5 Years)
Buying saves
Net Worth After 5 Years
Break-even point: Buying becomes financially better than renting after 1 year.
Year-by-Year Comparison
| Year | Rent | Buy | Equity | Net Diff |
|---|---|---|---|---|
| 1 | £18,000.00 | £23,552.32 | £72,233.01 | £6,680.69 |
| 2 | £18,540.00 | £23,642.32 | £84,918.40 | £14,263.75 |
| 3 | £19,096.20 | £23,735.02 | £98,074.53 | £22,781.06 |
| 4 | £19,669.09 | £23,830.50 | £111,720.63 | £32,265.75 |
| 5 | £20,259.16 | £23,928.85 | £125,876.77 | £42,752.19 |
Key Features
Comprehensive Cost Analysis
Accounts for all major costs including mortgage payments, property taxes, insurance, maintenance, HOA fees, and property appreciation to give you a complete financial picture.
Equity Tracking
See how your equity builds up over time as you pay down your mortgage and property values appreciate.
Break-Even Analysis
Discover when buying becomes financially more advantageous than renting based on your specific inputs.
Year-by-Year Breakdown
View detailed monthly and annual comparisons showing costs, equity, and net worth changes over time.
How It Works
Buying Scenario
The calculator accounts for all costs associated with buying a property:
- Down payment (one-time cost)
- Monthly mortgage payments (principal and interest)
- Property taxes (annual)
- Home insurance (annual)
- Maintenance costs (percentage of property value)
- HOA fees (if applicable)
- Property appreciation (gain in property value over time)
- Equity build-up (principal paid down on mortgage)
- Tax benefits from mortgage interest deduction (if applicable)
Renting Scenario
The calculator accounts for:
- Monthly rent payments
- Annual rent increases (based on your specified rate)
- Total rent paid over the time horizon
Comparison Results
The calculator compares:
- Total costs for each option over your specified time horizon
- Net worth difference (property value + equity vs. rent paid)
- Break-even point (when buying becomes financially better than renting)
- Year-by-year breakdown showing costs, equity, and net worth
Note: This calculator focuses on financial costs and does not account for lifestyle factors, flexibility, maintenance responsibilities, or other non-financial considerations that may influence your decision.
Why Use This Calculator?
Making the decision between renting and buying a home is one of the most significant financial choices you'll make. While both options have their merits, understanding the long-term financial implications can help you make an informed decision that aligns with your goals and circumstances.
This calculator goes beyond simple monthly payment comparisons. It provides a comprehensive analysis that accounts for property appreciation, equity build-up, rent increases, and all the associated costs of homeownership. By seeing the full financial picture over multiple years, you can better understand which option makes more financial sense for your specific situation.
Whether you're planning to stay in a location for a few years or decades, this tool helps you see how the financial dynamics change over time. The break-even analysis shows you exactly when buying becomes financially advantageous, helping you time your decision appropriately.
Common Questions
What factors should I consider beyond the calculator results?
While this calculator focuses on financial costs, you should also consider: your long-term plans (how long you'll stay in the area), lifestyle preferences (flexibility of renting vs. stability of owning), maintenance responsibilities, market conditions, and personal financial situation (emergency fund, other debts, etc.).
How accurate are the property appreciation and rent increase assumptions?
These are estimates based on historical averages, but actual rates can vary significantly by location, market conditions, and time period. Use conservative estimates and consider different scenarios (e.g., 2%, 3%, 5% appreciation) to see how results change.
What if I plan to move before the time horizon ends?
Adjust the time horizon to match your expected stay. Buying typically becomes more favorable the longer you stay, due to equity build-up and property appreciation. If you plan to move frequently, renting may be more cost-effective when accounting for transaction costs (closing costs, realtor fees, etc.).
Does the calculator account for closing costs and selling costs?
No, this calculator focuses on ongoing costs. In reality, buying involves closing costs (typically 2-5% of property value) and selling involves realtor fees and other costs (typically 6-10% of sale price). These one-time costs can significantly impact the comparison, especially for shorter time horizons.
What about the opportunity cost of the down payment?
This calculator shows the financial comparison but doesn't explicitly account for what you could earn by investing your down payment elsewhere (e.g., stocks, bonds). If you have strong investment alternatives, the opportunity cost of tying up capital in a property should be considered.
Are the results guaranteed?
No, the results are estimates based on the assumptions you provide. Actual outcomes depend on many factors including market conditions, interest rates, property values, rent changes, and unexpected costs. Use this tool as a starting point for your analysis, not as a definitive answer.
Understanding Your Results
The calculator provides several key metrics to help you understand the financial comparison:
Monthly Cost Comparison
Shows your monthly rent versus your total monthly homeownership costs (mortgage, taxes, insurance, maintenance, HOA). This helps you understand the immediate cash flow difference between the two options.
Total Cost Analysis
Compares the total amount you'll spend over your time horizon for each option. This includes all payments, costs, and accounts for property appreciation and equity build-up when buying.
Net Worth Projection
Illustrates your financial position after the time period. For buying, this includes your property equity. For renting, this reflects the cumulative rent paid. This metric helps you see the long-term wealth-building potential of each option.
Break-Even Point
Identifies the number of years it takes for buying to become financially better than renting. This is particularly useful for planning your timeline and understanding how your length of stay affects the financial outcome.
Remember, these calculations are based on the assumptions you provide. Market conditions, interest rates, and property values can change, so use these results as a starting point for your analysis rather than a definitive answer.
Getting Started
To use the calculator effectively, gather the following information:
For Buying:
- Property purchase price
- Available down payment
- Current mortgage rates
- Local property tax rates
- Insurance estimates
For Renting:
- Current monthly rent
- Expected rent increases
- Rental market trends
If you're unsure about some values, use conservative estimates. You can always adjust the inputs and recalculate to see how different scenarios affect the results. For more detailed guidance, visit our FAQ page.