Rent vs Buy Calculator
Compare the financial outcome of renting versus buying over a period you choose. The calculator factors in repayments, rent, property growth, stamp duty and the opportunity cost of investing the difference. This is an estimate only and does not constitute credit advice or an offer of credit.
Is that number right for your situation?
A calculator applies one formula. Lenders apply their own, and they disagree with each other. Send us what you worked out and we will tell you how it looks against real lender policy.
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How this is calculated
The calculator models two parallel scenarios over the period you choose. In the buying scenario, you pay stamp duty upfront, take out a loan for the balance, and make monthly repayments. The property grows in value at the rate you specify. At the end of the period, the buyer's net position is the property value minus the remaining loan balance, minus stamp duty paid, minus total interest paid.
In the renting scenario, you pay weekly rent (assumed to increase at the same rate as property growth) and invest the money you would have spent on stamp duty and the deposit. You also invest the difference between the buyer's monthly repayment and your monthly rent when the repayment is higher. Your invested savings grow at the return rate you specify. The renter's net position is the total invested balance at the end.
The difference between the two positions tells you which scenario is financially ahead at the end of the period. A positive difference means buying is ahead; negative means renting is ahead. The result is highly sensitive to the assumptions — particularly property growth and investment returns.
What this doesn't account for
- Maintenance and strata. Homeowners pay for maintenance, repairs, insurance and strata fees. Renters don't. These costs can be significant — budget 1–2% of property value per year for upkeep.
- Council rates and utilities. Owners pay council rates, water rates and sewerage. Some of these are included in rent for apartments.
- Tax. Capital gains tax (if the property is an investment), negative gearing benefits, and tax on investment earnings aren't modelled. These can significantly affect the real outcome.
- Flexibility. Renting allows you to move easily; buying involves high transaction costs to enter and exit. The financial value of flexibility isn't captured in a number.
- Rent increases. The calculator assumes rent rises at the same rate as property growth. In some markets rent rises faster; in others slower. Your actual rent path will differ.
- Inflation. All figures are in today's dollars, but the model doesn't adjust for inflation eroding the real value of debt or the real value of investment returns.
Common questions
Not necessarily. Whether buying or renting is financially better depends on property price growth, interest rates, rent levels, investment returns and how long you stay. In markets where prices are flat and rents are low, renting and investing the difference can come out ahead. In markets with strong price growth, buying usually wins. The key is running the numbers for your specific situation rather than relying on a general rule.
Look at long-term historical growth for the specific area you're considering — not just the last few years. Sydney's long-term average has been around 6–7% per annum, but that includes boom and bust cycles. Some years grow 15%, others go backwards. Try a range of assumptions to see how sensitive the result is.
No — this is purely a financial comparison. Owning a home has non-financial benefits: stability, the ability to renovate, certainty of tenure, and the discipline of forced saving. Renting offers flexibility and lower responsibility. These factors matter and can't be captured in a calculator. Use the numbers as one input into a broader decision.
Selling a home involves significant transaction costs — agent fees (2–3% of sale price), marketing, conveyancing and discharge fees. If you sell within the first few years, these costs can wipe out the equity you've built. The longer you stay, the more the buying costs are spread. This calculator assumes you hold for the full period, so it overstates the benefit of buying if you sell early.
Still deciding whether to buy?
We'll help you run the numbers for your actual situation and area — free, no obligation.