Rent vs buy calculator
Is it better to rent or buy? Enter your rent, property price, mortgage rate, deposit and expected property growth to see at what point buying becomes cheaper than renting — and by how much over time. The answer depends heavily on your assumptions, so you can adjust all of them.
The rent vs buy question has no universal answer — it depends entirely on the assumptions you feed in. What this calculator shows is the financial case only. It does not account for job security, flexibility to move, relationship changes, or whether you actually want to own property. Peter bought because the financial case stacked up and because he valued stability. Both reasons matter.
The opportunity cost of a deposit
This calculator includes what your deposit could earn if kept invested rather than used to buy. If you can earn 5 to 6% in a stocks and shares ISA, that is a real cost of buying that most rent vs buy comparisons ignore. Adjust the investment return assumption to see how much it matters.
Property growth assumptions matter
At 3.5% annual growth buying almost always wins over a long enough horizon. At 1 to 2% growth the case is much closer. The UK long-run average is around 3 to 4% but local markets vary enormously. Try adjusting the property growth rate to see how sensitive the result is.
Renting is not throwing money away
The old argument that rent is dead money ignores that mortgage interest, maintenance, insurance and ownership costs are also money that does not build equity. The honest comparison is mortgage interest plus costs versus rent plus the opportunity cost of the deposit.
This is a financial model, not a life plan
This calculator cannot account for the value of stability, the freedom to redecorate, the ability to have pets, or the security of owning your home outright in retirement. For most people these factors are as important as the numbers. Use this as one input into a bigger decision.
Please note: This calculator is a simplified financial model based on the assumptions entered. It does not account for changes in interest rates, variable rent increases, transaction timing, tax treatment, or the many unpredictable factors that affect property values and investment returns. All figures are illustrative only. This is not financial advice. Seek independent financial advice before making a major financial decision.
What does the rent vs buy calculator do?
The rent vs buy decision is more complex than it first appears because it involves comparing two sets of costs and returns over a specific timeframe. This calculator models both scenarios over your chosen period, accounting for the full cost of buying (mortgage payments, buying costs, maintenance), the full cost of renting (rent payments, renter’s insurance), property price growth on the purchase scenario, and the investment return on the deposit if invested instead of used for a house purchase.
The result is not always “buy is better” – the outcome depends heavily on assumptions about property price growth, investment returns, the length of the modelled period, and local rent-to-purchase price ratios.
Inputs explained
Property price: The purchase price of the property you are comparing.
Deposit: The amount you would put down if buying. If renting, this money is available to invest – the calculator models its growth at the investment return rate you specify.
Mortgage rate and term: The rate and remaining term of the mortgage in the buying scenario.
Monthly rent: The equivalent rental cost for the same or comparable property.
Property growth rate: The assumed annual increase in property value. The UK’s long-term average is approximately 3-4% annually in nominal terms, though this varies significantly by region and period.
Investment return rate: The assumed annual return if the deposit is invested rather than used for a purchase. A globally diversified index fund has historically returned 6 to 8% annually in nominal terms over long periods, though past performance does not guarantee future returns.
Time horizon: How many years do you plan to compare over? The longer the period, the more property growth and mortgage equity building favour the buying scenario.
Frequently asked questions
Does buying always win in the long term? Not necessarily – it depends on the relationship between property growth and investment returns, and on the ratio of mortgage costs to rental costs. In areas where property is expensive relative to rents and where investment returns are strong, renting and investing can produce comparable or better outcomes. The calculator makes this comparison explicit for your specific inputs.
What about the emotional and lifestyle value of owning? The calculator covers only the financial comparison. Owning a home provides security of tenure, the freedom to modify the property, and a guaranteed roof over your head, regardless of a landlord’s decisions – none of which appear in the numbers. These factors matter significantly for most people and should be weighed alongside the financial comparison.
What happens to rent in the model over time? The calculator applies an annual rent increase (typically linked to inflation) in the renting scenario. In practice, rents can rise above or below inflation, depending on local market conditions.
The information on this site is for educational and informational purposes only. Nothing on Be More Peter constitutes financial advice, and nothing should be treated as such. The calculators, articles and tools on this site are designed to help you understand financial concepts and run indicative numbers - they are not a substitute for professional advice tailored to your specific circumstances. Before making any financial decision - including decisions about mortgages, pensions, investments, savings or insurance — you should seek independent financial advice from a qualified adviser who is authorised and regulated by the Financial Conduct Authority (FCA). Calculator results are estimates based on the information you enter and the assumptions built into the tool. They are illustrative only and should not be relied upon as accurate projections. Rates, thresholds and rules change regularly - always verify figures with an appropriate professional or official source before acting on them. Be More Peter is not authorised or regulated by the FCA. The content on this site does not constitute a financial promotion.
Related tools and posts
- Mortgage affordability calculator — what you could borrow
- House deposit calculator — how long to save the deposit
- ISA calculator — what the deposit produces if invested instead
- Buy vs rent – how to actually run the numbers
- How to save for a house deposit