A Comparison With More Moving Parts Than It Looks
Rent versus buy is usually argued as though buying obviously wins because rent is "dead money". The arithmetic is less tidy: a mortgage payment is also partly dead money in the form of interest, and buying carries costs, transaction taxes, maintenance, insurance, that renting does not.
This calculator compares the two over a period you choose, accounting for what each option costs and what equity buying builds.
How to Compare the Two
The horizon is the input that decides the answer more than any other.
- Enter the purchase price, deposit and mortgage rate for the buying case.
- Enter the monthly rent for the comparable property you would otherwise live in.
- Enter the period you expect to stay. This matters more than any other input, for the reason set out below.
- Add the buying costs: transaction tax, legal fees, survey and any selling costs at the end.
- Add annual ownership costs: maintenance, insurance, service charges and property tax.
- Read the comparison, and treat the result as sensitive to the growth and rate assumptions rather than as a verdict.
Why the Break-Even Period Decides It
Buying carries large one-off costs at both ends. Transaction taxes, legal fees and surveys on the way in, and agent fees on the way out, commonly total between five and ten per cent of the property value. Those costs are spread across however long you stay, so they dominate a short holding and become negligible over a long one.
That is why the honest answer to rent versus buy is usually a number of years rather than a yes or no. Below roughly three to five years, transaction costs alone often make renting cheaper regardless of what house prices do. Beyond ten, buying tends to win in most markets unless prices fall materially. The exact crossover depends on local transaction taxes, which vary enormously.
What Each Option Actually Costs
Where the money goes in each case, and whether it comes back.
| Cost | Renting | Buying | Recoverable? |
|---|---|---|---|
| Monthly housing payment | Rent | Mortgage payment | Partly, the principal portion |
| Interest | None | Large early on | No |
| Transaction tax | None | Often 1โ10% of price | No |
| Legal and survey fees | Minimal | Several thousand | No |
| Maintenance | Landlord | You, ~1% a year | Partly, via condition |
| Insurance | Contents only | Buildings and contents | No |
| Selling costs | None | Agent and legal fees | No |
The principal portion of a mortgage payment is the only line that converts into equity, and early in a loan it is the smaller part of the payment. That is why "paying off your own mortgage instead of a landlordโs" describes less of the payment in year one than most people assume.
What the Comparison Cannot Settle
The result is only as good as the assumptions about house price growth, rent inflation and investment returns on the deposit if it were not spent. A deposit invested rather than committed to a property has its own return, and leaving that out biases the comparison toward buying. Small changes in any of these swing the answer, which is why running several scenarios is more informative than one.
Non-financial factors sit outside the calculation entirely and often decide it in practice. Buying reduces mobility and concentrates a large share of net worth in one asset in one location; renting keeps flexibility at the cost of security of tenure, which varies enormously by jurisdiction. This is a general illustration rather than financial advice.