Rent vs Buy Calculator

Currency

Property price

Down payment

Mortgage rate, %

Mortgage term, years

Rent a month

Comparison horizon, years

Price and rent growth, % a year

Investment return, % a year

Upkeep, % of the price a year

Result

Buyer's net cost

$6,083,483.00

Renter's net cost

-$3,958,061.00

Mortgage payment

$111,118.43

Property value less the debt

$9,950,728.00

Renter's portfolio

$19,992,272.00

Verdict

over this horizon renting and investing the difference stays cheaper

This result is informational only and is not professional advice.

Both sides have to spend the same money

Compares renting and investing the difference against buying with a mortgage over a horizon you choose, counting upkeep and price growth.

Most comparisons are rigged by accident. They set the mortgage payment against the rent and forget that the buyer also puts down a deposit, pays for upkeep, and ends up owning something — while the renter has cash that could have been invested.

This model gives both sides the same monthly outlay. Whatever the buyer spends on the mortgage and upkeep, the renter spends too: rent first, the rest into a portfolio. At the end, each side's wealth is subtracted from what they spent.

What this calculator shows

The net cost of buying and of renting over the horizon
The mortgage payment, the equity built and the renter's portfolio
The year in which buying overtakes renting, if it does

What to keep in mind

Property prices and rent grow at the same rate, which keeps the comparison from being decided by an assumption you cannot check.
Transaction costs, property tax and the tax on investment income are left out. All three shift the answer, and all three depend heavily on where you are.

FAQs

Why does renting win so often in the model?

Because it is decided by the gap between the mortgage rate and the investment return. When borrowing costs more than investing earns, paying interest on someone else's capital is expensive.

What makes buying win?

A low mortgage rate, high rent relative to the price, faster price growth, and a long horizon. Time helps the buyer because the loan balance falls while the asset does not.

Is the renter's discipline realistic?

That is the model's weak point. It assumes every rouble not spent on the mortgage is invested, month after month. Most people spend it, and that alone is a serious argument for buying.

What is not counted here?

The purchase and sale costs, property tax, the tax on investment gains, and the value of not being able to be asked to leave. The last one does not fit in a spreadsheet but decides plenty of cases.

Worked example

Nine million, an eighteen percent mortgage

Input: 9,000,000 property, 1,800,000 down, 18 percent for 20 years, 45,000 rent, a 10-year horizon

Output: renting comes out about ten million ahead

Note: At an eighteen percent mortgage rate the interest dwarfs the rent, and the deposit invested at twelve percent compounds hard. Drop the mortgage to eight percent and the answer flips.

Useful links

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Rent vs Buy Calculator

Result

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