Rent vs Buy Calculator

Use this rent vs buy calculator to compare the estimated cost of renting versus buying a home over a specific period of time. By adjusting rent, property price, mortgage details, and growth assumptions, you can see which option may be more cost-effective based on your circumstances.

This tool helps you understand the long-term financial impact of renting compared to buying, using clear assumptions and transparent calculations.

How the Rent vs Buy Calculator Works

This calculator compares two scenarios over the number of years you plan to stay in a property:

• Total cost of renting
• Net cost of buying, after accounting for equity and resale value

It then estimates the break-even point, the point at which buying may become cheaper than renting.

Renting Costs Explained

When calculating the cost of renting, the calculator includes:

• Monthly rent
• Annual rent increases
• Total rent paid over your chosen timeframe

Renting costs are treated as expenses that do not build ownership or equity.

Buying Costs Explained

When calculating the cost of buying, the calculator considers:

• Property purchase price
• Deposit or down payment
• Mortgage interest rate and term
• Monthly mortgage payments
• Upfront buying costs (such as legal or lender fees)
• Ongoing maintenance costs
• Property value growth
• Selling costs when the property is sold

The calculator estimates the equity you build over time and subtracts it from total cash outflows to calculate the net cost of buying.

What Is Equity?

Equity is the portion of the property you own outright. It increases through:

• Paying down your mortgage balance
• Property price growth over time

Equity can reduce the overall cost of buying when the property is sold.

Understanding the Break-Even Point

The break-even point is the estimated year in which the total net cost of buying is lower than the total cost of renting.

• If the break-even point is within your planned stay, buying may be more cost-effective
• If the break-even point is beyond your planned stay, renting may be cheaper

This estimate depends entirely on the assumptions you enter.

When Renting May Make More Sense

Renting may be more suitable if:

• You plan to stay for a short period
• Property prices are high relative to rent
• Maintenance and transaction costs are significant
• You value flexibility and mobility

When Buying May Make More Sense

Buying may be more suitable if:

• You plan to stay long-term
• Mortgage payments are comparable to rent
• Property values are expected to grow
• You want to build equity over time

Important Limitations to Consider

This rent vs buy calculator provides estimates only and does not include:

• Taxes or tax relief
• Investment returns on your deposit
• Inflation or opportunity costs
• Personal financial circumstances
• Changes in interest rates over time

Results should be used for comparison, not for financial advice.

Who Should Use This Calculator?

This calculator is useful for:

• First-time buyers
• Renters considering home ownership
• People relocating or changing cities
• Anyone comparing housing costs over time

It provides a structured way to explore different scenarios before making decisions.

Frequently Asked Questions

Is it better to rent or buy?

There is no single correct answer. The better option depends on costs, time horizon, market conditions, and personal circumstances. This calculator helps compare scenarios based on your inputs.

How accurate is this calculator?

The calculator uses standard financial formulas and assumptions. Actual outcomes may vary due to market changes, personal factors, and unforeseen costs.

Does this calculator work outside the UK?

Yes. This is a generic rent vs buy calculator and can be used internationally by adjusting currency and cost assumptions.

Summary

This rent vs buy calculator helps you compare the long-term financial impact of renting versus buying a home. By modelling costs, equity, and time, it gives you a clearer picture of which option may suit your situation better.

Additional Calculator resources:
Percentage Calculator
Percentage Increase/Decrease Calculator