Rent vs buy calculator
Buying
Renting
Ownership costs cover rates, insurance, maintenance and strata. Returns on savings are before tax. Nothing here is advice; the assumptions are yours.
Side by side
| Item | Buying | Renting |
|---|---|---|
| Monthly outlay at the start | $4,637 | $2,817 |
| Interest paid over 10 years | $356,043 | — |
| Ownership costs / rent paid | $111,558 | $387,479 |
| Home value at the end | $1,075,133 | — |
| Loan balance and selling costs | $562,467 | — |
| Net wealth at the end | $512,666 | $564,250 |
The renter's figure is the deposit and upfront costs invested at your return, plus any month where buying would have cost more than rent, also invested. Get the upfront figure from the upfront buying costs calculator.
If buying wins, is the loan available?
A licensed broker partner checks your borrowing power, the schemes that cut the upfront costs, and the rate you would actually get, so the buying column is real.
How the rent vs buy calculator works
It follows the method Savings.com.au and Moneysmart publish for their own calculators: compare the costs incurred and the returns realised from renting against purchasing over the same period. The buyer pays the upfront costs, the loan repayment and ownership costs each month, and ends with the home at its grown value less the remaining loan and selling costs. The renter pays rent, rising annually, keeps the deposit and the upfront costs invested at the return you set, and invests any month where the buyer's outlay would have exceeded the rent. The difference in net wealth at your horizon is the answer, on those assumptions. Savings.com.au's framing of the trade is right: the owner gets control and expected growth, the renter pays less month to month but the money returns nothing, and for many people the question is decided by the deposit before it is decided by the maths.
Reading the result
Short horizons favour renting because the upfront costs are sunk immediately and growth has not had time to work; long horizons favour buying because the loan balance falls while the value rises. The result is most sensitive to capital growth and the investment return, which compound, so test a pessimistic and an optimistic pair before drawing a conclusion. If buying wins and the deposit is the obstacle, the saving a deposit guide and the 5% Deposit Scheme change the upfront figure; if renting wins where you want to live, the investment property guide covers buying somewhere else instead.
Related guides and calculators
Rent vs buy FAQs
Is it better to rent or buy a home in Australia?
It depends on the numbers for the home, the years you will stay, and what the deposit would earn if you did not buy, which is why the honest answer is a calculator rather than a rule. Savings.com.au publishes the framing: a homeowner has more control and may expect the property to grow in value, while renting is usually cheaper month to month but returns nothing on the money spent. Over a short horizon the upfront costs of buying usually make renting cheaper; over a long one, capital growth and a shrinking loan usually favour buying. This calculator lets you set every assumption and see where the crossover is.
How do you calculate whether buying or renting is better?
Add up everything each path costs over the same period, and everything each path leaves you with at the end. Renting: rent with annual increases, minus what the deposit and the difference in monthly cost earn when invested. Buying: the upfront costs, the interest and ownership costs (rates, insurance, maintenance, strata), minus the home’s value at the end less the loan balance and selling costs. The path with more net wealth at the horizon wins. Moneysmart and Savings.com.au both publish calculators built this way.
What assumptions matter most?
Capital growth and the investment return on the deposit, because both compound over the horizon; then the interest rate and the rent-to-price ratio. A 1% change in assumed growth swings a 10-year result by tens of thousands on a $800,000 home. Use conservative figures and look at the range, not a single answer. The defaults here are deliberately plain: 3% growth, 3% rent rises, a 6% mortgage rate and a 5% return on invested savings.
Is a 4% rental yield good?
Gross rental yield is the annual rent divided by the price; 4% on an $800,000 home is $32,000 a year or about $615 a week. For a renter it means the rent is 4% of the price, against a mortgage rate of around 6% plus ownership costs, which is why renting the same home is often cheaper per month; the buyer is paying for the growth. For an investor, 4% gross is typical of capital cities and the net yield after costs is lower.
Does the calculator include stamp duty and LMI?
It includes an upfront costs figure you set; the upfront buying costs calculator works it out for your state, deposit and price, including stamp duty and LMI, and you can paste the total here. Selling costs at the end of the horizon are set as a percentage of the sale price.
What does rentvesting change?
Rentvesting means renting where you want to live and buying an investment property elsewhere. In this calculator’s terms it is the renting path plus an investment whose return you set; the rent you pay and the property you own are different homes. The investment property guide covers how the loan and the tax treatment differ.