Rent vs Buy Calculator
Compare your net worth from buying versus renting and investing the difference, year by year, with the break-even year and a clear verdict.
How long you expect to stay in the home.
Buying
Stamp duty or registration, legal, survey and fees.
1% is a common rule of thumb.
Council tax counts for renters too, so include only owner-only costs.
Agent and legal fees when you eventually sell.
Renting
Earned on the deposit and on any monthly saving.
| Year | Buy: net worth | Rent: net worth | Difference | Ahead |
|---|---|---|---|---|
| 1 | £38,801 | £49,285 | −£10,483 | Rent |
| 2 | £54,142 | £59,735 | −£5,593 | Rent |
| 3 | £70,043 | £70,349 | −£307 | Rent |
| 4 | £86,525 | £81,124 | £5,400 | Buy |
| 5 | £103,610 | £92,057 | £11,553 | Buy |
| 6 | £121,322 | £103,144 | £18,178 | Buy |
| 7 | £139,685 | £114,382 | £25,303 | Buy |
| 8 | £158,724 | £125,765 | £32,959 | Buy |
| 9 | £178,464 | £137,289 | £41,175 | Buy |
| 10 | £198,934 | £148,948 | £49,986 | Buy |
Renter net worth = (deposit + buying costs) grown at the return + each month's (owning cost − rent) invested.
Owning cost/month = mortgage payment + value × maintenance% ÷ 12 + annual charges ÷ 12. Mortgage: M = P·r(1+r)^n ÷ ((1+r)^n − 1).
- Comparing the mortgage payment with rent: the interest, upkeep, charges and lost investment return are the real cost of owning; the capital repaid is savings.
- Ignoring buying and selling costs: on a short stay they can wipe out all the equity you build.
- Assuming the renter invests the difference without a plan: the renting advantage only exists if the money is actually invested.
- Using an optimistic house price growth figure: test 0% to 2% too.
- →Run the numbers for the shortest time you might realistically stay, not the longest.
- →A bigger deposit lowers both your rate and the interest cost; see the effect in our Mortgage Calculator.
- →Get the buying costs right with our Stamp Duty Calculator (England, Scotland, Wales).
- →Next step: if buying wins, check your monthly budget at a rate 2 points higher before committing.
This tool is for informational purposes only. Always verify results with a qualified professional.
What is the Rent vs Buy Calculator?
Should you buy a home or keep renting? This rent vs buy calculator answers the question the honest way: it compares your net worth after each year under both choices, not just the monthly payment against the rent. Buying ties up a deposit and buying costs, and you pay mortgage interest, maintenance and property tax or service charges, but you build equity and benefit from any rise in the home's value. Renting is often cheaper month to month and keeps your cash free to invest. The calculator tracks both paths month by month for up to 40 years and shows the year buying overtakes renting, if it does.
How the model works: the buyer pays the deposit plus buying costs (stamp duty, legal and survey fees, or land registration and agency fees) up front, then each month pays the mortgage, maintenance as a percentage of the home's current value, and a fixed annual property tax or service charge. The renter keeps the same up-front cash invested at your chosen return. Each month, whoever has the lower housing cost invests the difference at the same return, so both sides spend exactly the same money. The buyer's net worth is the home's value after selling costs, minus the outstanding mortgage, plus any investments; the renter's net worth is their investment pot. Rent rises once a year by your chosen percentage and the home's value grows monthly at the appreciation rate.
Worked example: a £300,000 home with a 10% deposit, a 4.5% 25-year mortgage, 3% buying costs, 1% maintenance, £1,500 a year in charges, 3% house price growth and 2% selling costs, against renting a similar home for £1,200 a month rising 3% a year with 5% investment returns. Owning costs about £1,875.75 in the first month against £1,200 rent, so the renter invests the £675.75 difference plus the £39,000 up-front cash. After 1 year the renter is ahead (about £49,285 vs £38,801), the gap closes by year 3, buying wins from year 4, and after 10 years the buyer's net worth is about £198,934 against £148,948, roughly £49,986 ahead.
The answer is very sensitive to three assumptions: house price growth, investment returns and how long you stay. Short stays usually favour renting because buying and selling costs are spread over few years. High investment returns favour renting, while strong price growth and high rents favour buying. That is why the calculator includes a sensitivity grid showing the result at your growth and return assumptions plus or minus 2 percentage points; if the verdict flips within that range, the decision is genuinely close and lifestyle factors should decide.
What the model leaves out, honestly: taxes on investment gains (ISAs in the UK can shelter them), any capital gains tax on a home that is not your main residence, mortgage rate changes after a fixed period, the discipline needed to actually invest the difference every month, and non-financial factors such as security of tenure, freedom to renovate and flexibility to move. In the UAE, consider that expatriates face Central Bank deposit minimums of at least 20% for a first home, and in Pakistan that home finance is usually KIBOR-linked and repriced, so test a higher rate too.
How to Use This Calculator
- 1Choose a currency and how many years you expect to stay in the home.
- 2Enter the buying side: price, deposit %, mortgage rate and term, buying costs %, maintenance %, annual property tax or service charge, expected price growth and selling costs.
- 3Enter the renting side: monthly rent for a comparable home and the expected annual rent increase.
- 4Enter the annual return you could realistically earn by investing the deposit and any monthly savings.
- 5Read the verdict, break-even year and the year-by-year net worth chart and table.
- 6Check the sensitivity grid to see whether the verdict holds if growth or returns are 2 points higher or lower, and copy the link to save your scenario.