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Rent vs Buy Calculator

Compare renting with buying the same home: what you’d have after you sell, including stamp duty, council rates and what your deposit could earn if you invested it.

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A week

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Years before you’d sell or move

More options· Growth, investment return and the costs of owning
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Growth a year

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Growth a year

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Return a year

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% of value a year

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% of value a year

Years

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A year

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A month: condo, strata or service charges

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Taxes and fees, % of price

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Agent and legal fees, % of value

Renting leaves you better off by

$67,661

After 7 years, once the home is sold and costs are paid

Buying pays off after
22 years
Owning, first month
$4,953/mo

What this means

Compare rent with the costs of owning you don’t get back, not the whole mortgage payment. In the first year those come to about $4,334 a month (mortgage interest, council rates, repairs and insurance), against rent of $3,033 a month.

Buying comes out ahead from year 22. Until then, the $36,000 it costs to buy, and the costs of selling, haven’t been earned back. If you’d move sooner, renting is likely to cost less.

Next step

What you’d have, year by year

YearBuyingRenting
1$170,970$229,505
2$203,126$263,953
3$236,518$299,370
4$271,201$335,781
5$307,233$373,213
6$344,673$411,692
7$383,585$451,247

How it’s compared

  • Buying: what the home is worth when you sell, minus the mortgage left and the costs of selling.
  • Renting: the deposit and buying costs you’d have invested instead, growing at 5% a year.
  • Each month, whichever costs less invests the difference, so both spend the same.
Assumptions in this estimate
  • Rates, growth and returns stay the same every year. Mortgage insurance, tax breaks on home sales and tax on investment returns aren’t included: use an after-tax return for the investments.
  • Insurance and other owner costs rise with rent each year.
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How the calculator works

The calculator follows two people from the same starting point:

  • The buyer pays the deposit and costs to buy, mostly stamp duty, then the loan, council rates, insurance and repairs. When they sell, they keep the home’s value minus the loan left and the costs of selling.
  • The renter invests the deposit and costs to buy instead, and pays rent.

Each month, whoever pays less invests the difference, so both spend the same. The result is who has more after the years you choose.

Example

An $800,000 home with a $160,000 deposit, at 6.2% over 30 years, against rent of $700 a week:

Amount
Owning, first month $4,953
Loan repayment $3,920
After 7 years Renting ahead by about $68,000
Buying pays off after 22 years

Home price growth changes everything: at 5% a year instead of 3%, buying comes out ahead by about $64,000 after 7 years, and pays off after 4.

What matters most

  • Home price growth: small changes make a big difference over time.
  • How long you stay: stamp duty takes years to earn back.
  • Your interest rate: at higher rates, more of each repayment is interest you don’t get back.

Work out the tax to buy with the stamp duty calculator, or read is renting dead money?

Last updated

Frequently asked questions

Is it cheaper to rent or buy in Australia?

It depends most on how fast home prices grow, how long you stay, and your interest rate. Stamp duty makes buying expensive, so the longer you stay, the more likely buying comes out ahead.

Isn’t rent just dead money?

Owning has costs you don’t get back too: interest, council rates, insurance, strata and repairs. Only the part of the repayment that pays off the loan builds wealth. If those costs are more than rent and you invest the difference, renting can leave you better off.

Does it include lenders mortgage insurance?

No. With less than a 20% deposit you usually pay LMI, unless you use the 5% Deposit Scheme. Add it under costs to buy if you’d pay it.

What about tax on the gains?

Your main residence is usually free of capital gains tax, while investment returns are taxed. Enter an after-tax return for the investments.