Buying and renting aren't just two prices, they're two completely different financial structures: one builds equity slowly while tying up a deposit, the other keeps your capital liquid but builds nothing. This calculator compares both paths side by side over your chosen time horizon, factoring in what your deposit could otherwise have earned if invested rather than spent.
How this calculation works
The buying side of this calculator tracks your outstanding mortgage balance year by year using a standard repayment amortisation, applies your chosen annual house price growth rate to estimate the property's value at each point, and adds your ongoing maintenance and running costs as a separate cost line rather than assuming they cancel out against anything else. Your "net position" as a buyer is the property's estimated value minus your outstanding mortgage balance (your equity), minus the cumulative interest and maintenance costs paid along the way.
The renting side assumes your deposit, instead of being spent on a purchase, is invested and grows at your chosen expected return, and tracks cumulative rent paid, which rises each year according to your expected rent growth rate. Your "net position" as a renter is the grown value of that invested deposit minus the total rent paid over the same period.
It doesn't include stamp duty, conveyancing, or moving costs on the buying side, letting fees or deposit costs on the renting side, tax on investment returns, or the psychological and lifestyle value of owning versus renting, none of which are purely financial. Use this as a genuine starting orientation for the size and direction of the financial gap between the two paths, not as a complete personal financial plan.
What the comparison is actually sensitive to
- The gap between house price growth and investment returns. If your assumed investment return is meaningfully higher than your assumed house price growth, renting and investing the deposit looks progressively stronger the longer the time horizon runs.
- The mortgage rate relative to rent growth. A higher mortgage rate slows equity build-up in the early years specifically, since more of each payment goes to interest rather than principal.
- The time horizon itself. Buying costs (stamp duty, moving costs, not modelled here) are effectively fixed regardless of how long you stay, so they're diluted over a longer horizon; a very short horizon tends to favour renting almost regardless of the other assumptions.
The most useful way to use this tool isn't to find "the" answer once, it's to see how sensitive the result is to a specific assumption you're genuinely uncertain about, your own expected house price growth or investment return, for example, by adjusting just that one field and re-running the calculation.
Frequently asked questions
Does this calculator include stamp duty and moving costs?
No, this version focuses on the core ongoing cost comparison. For the specific transaction costs of buying, use our Stamp Duty Calculator alongside this tool for a fuller picture.
What investment return should I assume for the deposit?
This depends entirely on your own risk tolerance and what you'd realistically do with the money if you didn't buy. A cautious assumption might use a savings-account-like return, while a higher assumption might reflect a diversified investment portfolio; the difference between these assumptions can meaningfully change the result, so it's worth testing more than one.
Why does a longer time horizon usually favour buying?
Fixed, one-off costs of buying (stamp duty, legal fees, moving costs) are spread over more years the longer you stay, reducing their annualised impact, while mortgage principal repayment compounds and equity typically builds more in later years of a repayment mortgage than earlier ones.
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