Rent vs Buy Calculator
Buying a home vs renting and investing the difference.
The Rent vs Buy Calculator settles the eternal argument by growing property equity vs an invested portfolio side by side.
Who is it for? First home buyers weighing renting + ETFs against buying, and homeowners considering downsizing.
Assumptions: Ignores stamp duty, LMI, maintenance, rates, and insurance on the buy side.
Buy: property grows at the assumed rate, the loan shrinks via principal, equity = value - loan. Rent: the deposit is invested. Each year, whichever option costs less (mortgage vs rent) invests the difference, so neither side gets a free advantage.
What the comparison really is
Buying isn't just paying a mortgage instead of rent. A fair comparison puts the deposit and any monthly saving to work somewhere else. This calculator compares two people: one buys, and builds equity as the loan is paid down and the home grows in value; the other rents and invests the deposit, plus any difference in monthly costs, in shares.
Which one ends up ahead depends mostly on property growth compared with share returns, the interest rate, and how much rent costs compared with buying the same home.
Costs this calculator leaves out
To keep it simple, the buy side doesn't include:
- stamp duty (see the stamp duty calculator) and legal costs
- lenders mortgage insurance if your deposit is under 20%
- council rates, strata, insurance and maintenance, which often add 1% to 2% of the home's value a year
Frequently asked questions
Neither always wins. Buying tends to come out ahead over long periods when property growth is strong and rent is high relative to prices. Renting and investing can win where prices are high relative to rent, or over shorter periods.
Usually several years. Stamp duty and buying costs take time to recover, so buying a home you'll sell within two or three years often loses to renting.
No. Your main residence is generally exempt from CGT, while gains on an investment portfolio are taxed. That's a real advantage for buying.