Rent vs Buy Calculator

Compare the financial implications of renting versus buying a home based on your specific situation. Make a smarter decision with our comprehensive analysis of long-term costs and benefits.

Note: This calculator provides insights only and is not financial advice. Always consult with a qualified financial advisor before making important financial decisions.

Calculator Inputs

Buy Scenario

Home Price

Down Payment (10%)£35,000.00

Mortgage Rate (%)

Mortgage Term (years)

Annual Council Tax (£)

Annual Home Insurance (£)

Annual Maintenance (% of home value)

Home Appreciation Rate (%)

Home Depreciation Rate (%)

ⓘ

This accounts for the physical deterioration of the property over time. The net appreciation is calculated as appreciation rate minus depreciation rate.

Monthly Service Charge (£)

Additional Annual Costs (£)

Rent Scenario

Monthly Rent (£)

Annual Rent Increase (%)

Annual Renters Insurance (£)

Annual Council Tax (£)

Additional Annual Costs (£)

Add Council Tax to my rent calculation

General Assumptions

Capital Appreciation Rate (%)

ⓘ

This is the annual capital appreciation rate you expect from investments. It affects how much your down payment could grow if invested instead of buying a home, and how much the monthly payment difference between renting and buying could grow if invested. Higher rates typically favor renting.

Dividend Yield (%) - Reinvested

ⓘ

This is the annual dividend yield you expect from investments. Dividends are assumed to be reinvested, contributing to the compound growth of your investments. The total investment return is the sum of capital appreciation and dividend yield.

Total return: 7.0% (Capital appreciation + Dividends)

Time Horizon (years)25 years

Inflation Rate (%)

ⓘ

Inflation reduces the real value of money over time. In our calculations, inflation affects the real return on investments (nominal return minus inflation) and the future value of cash flows. Higher inflation rates generally reduce the advantage of long-term investments.

Monthly Cash Flow Difference

Buying costs -£0.00 more per month

This difference is assumed to be invested annually at 7.0% annual return (with dividends reinvested), with a real return of 4.9% after inflation.

Should You Rent or Buy a Home?

Deciding whether to rent or buy a home is one of the biggest financial decisions you'll make. Our rent vs buy calculator helps you compare the long-term financial implications of both options based on your specific situation.

The calculator takes into account factors like home price, down payment, mortgage rate, property taxes, maintenance costs, rent increases, and investment returns to give you a comprehensive analysis of which option might be better for you financially.

Key Factors to Consider When Deciding to Rent or Buy

Time Horizon: How long do you plan to stay in the home? Generally, the longer you stay, the more buying makes financial sense.
Housing Market: Is the market overvalued or undervalued? What are the trends in home appreciation in your area?
Investment Returns: What could you earn if you invested the down payment and the difference in monthly costs?
Tax Implications: How do mortgage interest deductions and property taxes affect your tax situation?
Lifestyle Flexibility: Do you value the flexibility of renting or the stability of owning?

Our calculator helps you quantify the financial aspects of this decision, but remember to consider non-financial factors as well, such as the desire to customize your living space, community stability, and personal preferences.