Rent vs buy calculator
Renting is not throwing money away, and buying is not automatically building wealth. Which one leaves you better off depends on how long you stay, what your money could earn elsewhere, and how much of your deposit gets swallowed by costs on day one. This works it out properly rather than comparing the monthly numbers alone.
If you bought
If you rented
Assumptions
Your result
Your position over time
What you would walk away with if you sold on any given month, either path.
How this is worked out
Every month, both paths are compared honestly. The buyer pays a mortgage, running costs, and started with a lump sum spent on the deposit and buying costs. The renter pays rent, and invests everything the buyer sank into that lump sum, plus whichever amount they save in any month where rent costs less than the mortgage and running costs combined. If buying is ever cheaper in a given month, the buyer invests that saving instead. Nobody's money just vanishes.
Owner's position = property value − mortgage owed − selling costs + savings invested
Renter's position = deposit and buying costs invested + rent savings invested,
both growing at the assumed investment return
Whichever is higher is the one that has left you better off, by that amount.
Why renting often looks ahead at first
Buying has an upfront cost renting doesn't: stamp duty, conveyancing and other fees, which are gone the moment you complete and buy nothing towards ownership. The renter still has that money working for them. It typically takes several years of equity building and house price growth for buying to catch up, which is exactly what the chart shows.
What actually decides the answer
- How long you stay. The single biggest factor. Buying costs are largely fixed regardless of how long you own the property, so they matter far less spread over fifteen years than over three.
- What your money could earn elsewhere. A higher assumed investment return makes renting look better, since the alternative use of your deposit becomes more valuable. This is the assumption worth stress-testing most, since it is also the hardest to know in advance.
- House price growth. Works entirely in favour of buying, and is just as uncertain as investment returns. Try a lower or even negative figure to see how much the result depends on it.
- Rent growth. Faster-rising rent makes buying look better over time, since the buyer's mortgage payment is fixed while the renter's cost keeps climbing.
What this ignores
Tax on investment returns outside an ISA, mortgage rate changes when a fixed deal ends, the value of not being able to be asked to leave, the effort and cost of moving as a renter, and the fact that a mortgage is a forced savings habit in a way that "investing the difference" often isn't in practice. None of these are small, and all of them push in different directions, so read the number as a considered estimate rather than a verdict.