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How this works
The calculator follows two versions of you with the same money. One buys, paying the deposit and buying costs up front, then the mortgage and upkeep each month. The other rents and invests the deposit and buying costs instead.
Each month, whichever path is cheaper invests the difference. At the end it compares the buyer’s home equity, after selling costs, plus any investments with the renter’s investments, and shows the first year buying comes out ahead.
What it assumes
- In pounds, stamp duty uses England and Northern Ireland rates for a main home. Scotland and Wales have their own taxes.
- Tax on investments, insurance, ground rent and service charges aren’t included.
- Rates stay the same throughout and rent rises once a year, so try a few scenarios.
Worked example
A £300,000 first home versus £1,200 rent
- You put down £30,000 and borrow the rest at 4.5% over 25 years, so the mortgage is £1,500.75 a month. As a first-time buyer you pay no stamp duty, plus £3,000 in fees.
- Rent and house prices both rise 3% a year, investments return 5%, upkeep is 1% of the home’s value and selling costs 2%.
- After 10 years the home is worth £403,175 with £196,178 still owed. Buying leaves you £198,934 better off against £119,879 for renting, £79,055 ahead.
- Buying pulls ahead in year 2. If you moved after three years, it would still be £11,475 ahead.
Worked out with the same maths as the calculator above.
What to do next
Common questions
Why does buying usually win over long periods?
Your mortgage payment stays roughly level while rent tends to rise, and each payment builds equity. But that depends on house prices, rates and how long you stay, so try lower price growth too.
When does renting come out ahead?
Typically when you’ll move within a few years, house prices are flat, mortgage rates are high compared with rents, or investments return a lot more than property.
What buying costs should I include?
Stamp duty, solicitor and survey fees, mortgage arrangement fees and moving costs. The calculator adds stamp duty for you and you enter the rest as fees.
Does this include the risk of house prices falling?
Not directly. Prices grow steadily at the rate you enter. Try 0% or 1% to see how much the answer depends on it.