About the Rent vs Buy Calculator
"Rent is dead money" is the most repeated piece of advice in personal finance, and it is wrong often enough to be worth checking rather than assuming.
The usual comparison puts a mortgage payment next to a rent and declares the smaller one better. That comparison is loaded, because it leaves out three real costs of owning: the return your deposit would have earned invested, the money it takes to buy and to sell, and everything that is not the mortgage — tax, insurance, maintenance.
This calculator compares net wealth instead. Both people start with the same cash and the same monthly budget. Whoever spends less in a given month invests the difference at the same return. Then it asks a simple question: after N years, who is better off?
The answer is a date, not a verdict.
How to Use the Rent vs Buy Calculator
Enter the property price, your deposit, the mortgage rate and term.
Then the rent you would pay instead, and how long you would stay — the single most important input on the page.
The running costs of owning: property tax, insurance and maintenance as a percentage of value. About 1% a year is the usual rule of thumb.
Then the three assumptions that decide everything: house price growth, rent growth and the return on invested savings.
Finally the cost of buying and the cost of selling. Both matter and the second is routinely forgotten.
How the Comparison Works
Both positions start identically and are tracked month by month.
The buyer spends the deposit plus buying costs on day one, then pays the mortgage, tax, insurance and maintenance every month. Their wealth is the property value, less the mortgage balance, less what it would cost to sell today.
The renter invests that same up-front cash instead, and pays rent. Their wealth is the portfolio.
Each month, whoever spends less invests the difference. This is what makes the comparison fair. If owning costs £894 a month more than renting, the renter invests £894 a month on top of their initial pot. If rent is higher, the buyer invests the gap instead.
Without that rule, a comparison either ignores the deposit's opportunity cost or quietly gives one side a bigger budget. Most calculators do one or the other.
The Default Case
£320,000 property, £32,000 deposit, 6% mortgage over 30 years, against £1,500 a month in rent. 3% house price growth, 3% rent growth, 6% investment return, 3% to buy and 5% to sell.
Up front: 32,000 deposit + 9,600 buying costs = 41,600
Month one: owning 2,394.03 vs rent 1,500.00
gap of 894.03, which the renter investsAfter seven years:
| Wealth | |
|---|---|
| Buy | 115,720.64 |
| Rent | 142,064.71 |
Renting is £26,344 ahead, and it stays ahead for a long time. Buying does not overtake until 17 years and 6 months.
That result surprises people, and it comes from two places. The buyer has £29,278 of transaction costs to recover — £9,600 to buy and £19,678 to sell. And the renter's £41,600 has been compounding at 6% the whole time.
How Sensitive the Answer Is
Now change the two assumptions nobody can actually know, and watch the answer move:
| House growth | Investment return | Buying overtakes at |
|---|---|---|
| 6% | 4% | 2 years 7 months |
| 5% | 6% | 4 years 1 month |
| 3% | 3% | 8 years 2 months |
| 3% | 6% | 17 years 6 months |
| 2% | 8% | never, within 40 years |
This table is the honest content of the whole page.
The break-even swings from under three years to never, and every row is a plausible set of assumptions. If house prices grow faster than your portfolio, buy. If your portfolio grows faster, rent. Everything else is detail around that one comparison.
Anyone who tells you renting or buying is better without stating those two numbers is guessing, whatever else they know.
Where the Lines Cross
Tracking both positions on the default figures:
| Year | Buyer | Renter | Difference |
|---|---|---|---|
| 1 | 28,657 | 54,911 | −26,254 |
| 3 | 55,467 | 82,548 | −27,081 |
| 5 | 84,423 | 111,583 | −27,160 |
| 10 | 167,536 | 190,605 | −23,069 |
| 15 | 269,003 | 279,392 | −10,390 |
| 20 | 394,423 | 379,440 | +14,983 |
Note that the gap widens for the first five years before it starts closing. The early years of a mortgage are almost all interest, so very little of the payment builds equity, while the transaction costs are already spent.
Buying is a slow-starting position. That is why the length of stay matters more than anything else on the page.
Step-by-Step Example
£320,000, £32,000 down, 6% over 30 years, seven-year stay.
Loan: 320,000 − 32,000 = 288,000
Mortgage: 288,000 at 6%/30yr = 1,726.71 a month
Owning, month 1:
Mortgage 1,726.71
Property tax 3,600 ÷ 12 300.00
Insurance 1,200 ÷ 12 100.00
Maintenance 1% of the value ÷ 12 267.32
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2,394.03
Rent, month 1 1,500.00
Gap the renter invests 894.03Maintenance is charged on what the property is worth that month rather than what you paid for it, so it rises with the value — £267.32 in month one and more every year after. That is why it is entered as a percentage rather than an amount.
After 7 years:
Property 393,559.64
Less mortgage −258,161.02
Less selling −19,677.98
───────────
Buyer wealth 115,720.64
Renter wealth 142,064.71Understanding Your Result
Over your horizon names the winner at the number of years you entered, and by how much.
Break-even is when buying overtakes renting — which may be well past the period you asked about, and is the more useful number.
If you buy breaks the buyer's position into the property, the mortgage and what selling would cost.
If you rent shows the portfolio, and reminds you it began with the money you did not put into a house.
Worth knowing interprets which case you are in.
When Should You Use This Calculator?
Before buying, if you might move within a decade. This is the case where the conventional advice most often fails.
When comparing a specific property to a specific rent. Generic advice cannot account for the local ratio between prices and rents, which varies enormously.
To test your own assumptions. Run it at growth rates you think are pessimistic and optimistic. If buying wins in both, buy with confidence. If it flips, you know what the decision actually rests on.
When a landlord raises the rent. Rent growth is an input here, and a sharp rise moves the break-even meaningfully.
Before assuming renting is wasted money. Sometimes it is. Often it is not.
Common Mistakes
Comparing a mortgage payment to a rent. They are not comparable things. One builds equity, one does not, and neither includes what the deposit could have earned.
Forgetting the cost of selling. On these figures it is £19,678 — larger than the cost of buying, and it lands exactly when you need the money.
Ignoring maintenance. A renter's boiler is someone else's problem. Roughly 1% of value a year is the usual estimate and it is real.
Assuming house price growth you would not accept elsewhere. If you would not plan on 6% a year from an investment, do not plan on it from a house.
Assuming the renter actually invests the difference. This calculator assumes they do. If the money is spent, buying wins by default — forced saving is a genuine advantage of a mortgage, just not a financial one.
Treating the output as the whole decision. Security of tenure, the freedom to move, the freedom to decorate and the stress of either position are real and are not money. This page prices the financial side only.
Reading this as advice. It uses fixed rates throughout, ignores tax treatment that varies by country, and rests on assumptions nobody can verify. Every figure here is an estimate for planning, not financial advice.