Rent or buy a house calculator
This is the million-dollar question. Quite literally, in a lot of the country.
Buying a house is almost certainly the biggest purchase you will ever make, so it is worth more than a quick comparison of the rent you pay now against what the mortgage would be. That comparison is the one most people make, and it is the one that misses the most.
This calculator does the fuller version.
Enter your details in the purple cells. It's your sheet to keep and change.
First, a warning about the question itself
There have been, are, and always will be arguments about whether it is better to rent or to buy. It is a debate that gets heated, so strong are people's opinions. There is never a clear winner for everyone.
The problem is that nobody arguing about it knows your situation.
If you move around a lot, renting is better. If you want to knock out a wall, owning is better. If a large mortgage would keep you up at night, renting is better. If being asked to move on every eighteen months would drive you mad, owning is better.
So don't ask whether it is better to rent or to buy. Ask whether it is better for you.
Why the rent vs buy debate is flawed
The calculator won't answer that question for you either. What it will do is give you the financial side properly, so you can weigh it against everything else that matters.
What most comparisons leave out
Rent against mortgage payment is not a fair fight. When you own, you also pay:
Rates, which have been climbing faster than inflation in most districts
Insurance, same story
Maintenance, which is easy to ignore because it isn't monthly — until the roof, the hot water cylinder or the repaint arrives
Body corporate fees, if it's an apartment or a townhouse
The costs of buying and selling — legal, building report, and the agent's commission on the way back out
None of that lands on a tenant.
But the one people miss most isn't a cost at all.
Your deposit could have been doing something else
If you put $150,000 into a deposit, that money is no longer available to be invested. Whatever it would have earned somewhere else, you have given up. That's the opportunity cost, and it's usually the largest number nobody counts.
It cuts both ways, though. A tenant only comes out ahead if they actually invest the difference. Renting and spending the gap is not a strategy, and it's the flaw in most "just rent and invest" arguments you'll read online.
The calculator handles both sides. You set what you'd expect to earn on the money if you invested it instead, and it runs the comparison from there.
"Rent money is dead money"
You'll hear this one a lot. It doesn't survive much examination.
Rent buys you somewhere to live. So does mortgage interest — that money goes to the bank and you never see it again either. Neither one builds you anything. The part of your payment that does build something is the principal, and in the early years of a table loan that part is small.
In year one of a typical loan, around 80% of the payment goes to interest.
Rates, insurance and maintenance are dead money too, in exactly the same sense.
None of that makes buying a bad idea. It just means the slogan isn't an argument.
How long you stay changes the answer
This is the one variable that moves the result more than any other.
Buying carries big costs at both ends. Over two or three years there often isn't enough capital growth to cover them, and you can come out behind even in a rising market. Over twenty years, those same costs barely register.
So the honest answer to "should I rent or buy" usually starts with "how long are you likely to stay?" — and if the answer is "not sure", that's worth knowing before you sign anything.
What the calculator does
You enter what you're paying in rent, what you'd be buying, your deposit, the mortgage rate and your assumptions for house price growth and investment returns. It compares the two over your timeframe and shows where you'd end up either way.
You can change the growth rates — and you should. Run it with house prices growing strongly and investments doing poorly. Then run it the other way. If buying wins under both, you have your answer. If the result flips depending on which assumption you feed it, that tells you the decision is a bet rather than a certainty, which is useful to know.
What it can't tell you
Every number in it is an assumption about the future, and nobody knows what house prices or investment returns will do over the next twenty years. Anyone who tells you otherwise is guessing with more confidence than the rest of us.
It also can't price the things that made you ask the question in the first place. Whether you'd sleep better owning. Whether you'd resent the mortgage. Whether staying put for ten years suits the life you actually want.
Renting is best for some. Buying is best for others. Two different answers, both of them right.
Want help working out which one you are?
If you'd like someone to go through the numbers with you (and the parts that aren't numbers), get in touch for a free 30 minute chat. Independent, commission-free, and I don't sell houses or mortgages.