Rent vs. Buy Calculator
Compare the true cost of renting vs. buying a home over time, including equity, opportunity cost, and hidden costs.
How long you plan to stay
Historical average is 3–5% per year
How to Use This Calculator
1. Enter the home price and your expected down payment percentage 2. Enter the mortgage rate — check current rates with your bank or broker 3. Enter your current rent — what you pay per month today 4. Set a time horizon — how long you plan to stay (this is the most important factor) 5. Estimate home appreciation — 3–5% is the Australian historical average
Key Insight:
The longer you stay, the more buying tends to win. If you're moving within 3–5 years, renting often wins once you factor in transaction costs.Formula
Net Buy Cost = Upfront + Mortgage Payments + Running Costs − Future Home Value | Rent Cost = Total Rent + Opportunity Cost of Down PaymentFrequently Asked Questions
What costs does buying a home include?
Purchase price, stamp duty (~4%), legal fees, mortgage repayments, council rates, strata fees, maintenance (~1%/yr), insurance, and selling costs when you eventually sell.
What is opportunity cost in this context?
The money used for a down payment could instead be invested in the stock market. If the down payment is $130,000 and the market returns 7%/yr, that's a significant foregone gain — this calculator includes that.
How long do I need to stay to make buying worthwhile?
Generally 5–7 years in most Australian markets, due to transaction costs like stamp duty. The break-even point varies significantly by city and property price.
Is this calculator suitable for Australian buyers?
Yes — stamp duty estimate is included. For precise stamp duty, check your state's revenue office as rates vary by state and first home buyer status.
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