Rent vs Buy Calculator
Should you rent or buy? Net worth after buying (home value, mortgage, stamp duty, upkeep, selling costs) against renting and investing the difference, year by year.
This calculator compares what you'd be worth after buying a home with what you'd be worth if you kept renting and invested the money instead. It counts stamp duty (England and Northern Ireland, Scotland or Wales), the mortgage, upkeep, insurance and the cost of selling at the end. On the renting side it counts rent and the returns on the cash you didn't spend on a deposit.
"Rent is dead money" only tells half the story. Mortgage interest, upkeep, stamp duty and selling costs are dead money too, and a deposit tied up in a house can't earn anything elsewhere. Which side wins depends mostly on how long you stay, how fast house prices rise, and how rent compares with the interest and upkeep you'd pay.
How the comparison works
Both households start with the same cash: enough for the deposit, stamp duty and buying fees. The buyer spends it on the home. The renter invests all of it.
Every month both households have the same budget. If owning (mortgage, upkeep, insurance, service charge) costs more than rent, the renter invests the difference. If rent costs more, the buyer invests it. This is the fair way to compare, because otherwise the cheaper option's savings simply disappear.
At the end of your stay the buyer sells: the home's value minus selling costs and the mortgage left, plus any investments. The renter has their investments. The calculator compares the two figures, and the break-even year is the first year buying comes out ahead.
What moves the answer
- How long you stay. Stamp duty, buying fees and selling costs are paid once. Over two or three years they can wipe out the gains from owning, but over ten they matter much less.
- House price growth. A 10% deposit means a 3% rise in prices is roughly a 30% return on your deposit, and a fall works the same way in reverse. The results card shows the answer if prices stay flat.
- Rent against interest and upkeep. Early in a repayment mortgage most of each payment is interest. If rent is lower than interest plus upkeep, the renter saves the difference and invests it.
- Investment returns. Invested money compounds. A higher return helps renting; a lower one helps buying.
- The mortgage rate. Higher rates mean more interest every month and more of each payment lost.
Worked example
A first-time buyer in England looks at a £300,000 home with a 10% deposit at 4.5% over 25 years: £1,501 a month on the mortgage, no stamp duty, and £33,300 in cash to buy. Renting a similar home costs £1,300 a month.
Assuming house prices rise 3% a year, rents 3.5% and investments return 5%, buying is ahead after 2 years and £96,400 ahead after 10. If house prices don't rise at all, the two are almost level after 10 years: buying wins by about £1,000. Renting wins over 10 years if rent is under about £760 a month.
What this calculator leaves out
It uses one mortgage rate for the whole term, while in reality you'd remortgage every few years at whatever rates are then. It assumes the renter's investments are in an ISA, so returns are tax free, and that the home is your main home, so there's no capital gains tax when you sell. It doesn't count moving costs, furnishing, the security of owning, or the flexibility of renting, which can matter more than the money. All figures are in future pounds, not adjusted for inflation, but both sides are measured the same way.
Frequently asked questions
- Is it better to rent or buy in the UK?
- Over five years or more, buying usually comes out ahead if house prices rise at least gently and the mortgage isn't much dearer than rent. Over two or three years renting often wins, because stamp duty, fees and selling costs have no time to be earned back. The calculator works it out for your numbers.
- Is rent dead money?
- Rent is a cost you don't get back, but so are mortgage interest, upkeep, insurance, stamp duty and selling costs, and so is the return a deposit could have earned invested. The fair comparison is between rent and those costs, not rent and the whole mortgage payment.
- How long do I need to stay for buying to be worth it?
- Long enough for house price growth and paying off the mortgage to cover the one-off costs of buying and selling. With typical assumptions that is often two to five years, and longer when prices are flat or rents are low. The calculator shows the break-even year.
- What does investing the difference mean?
- Whichever choice costs less each month leaves money spare. The calculator assumes that money is invested rather than spent, and that the renter also invests what the buyer would have put into the deposit and fees. Without this, renting always looks worse than it is.
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