Rent vs Buy Affordability Calculator

A rent vs. buy analysis is a detailed comparison to determine whether it is more financially advantageous to rent a property or to buy a home, based on your personal financial situation and the conditions of your local property market. It goes beyond simply comparing a monthly rent payment to a monthly mortgage payment.

The calculator compares the total costs of both scenarios over time. For renting, it calculates the total rent paid. For buying, it sums up the mortgage repayments (both principal and interest), plus ongoing costs like council rates, maintenance, and body corporate fees. It then factors in the potential growth in the property's value (capital growth) to determine the net financial position of owning versus renting after a certain number of years.

• The 'break-even' point is the most important result. This is the number of years you need to own the property for the financial benefits of owning (like capital growth) to outweigh the high upfront and ongoing costs (like stamp duty and interest).
• Renting offers flexibility and freedom from the costs of maintenance and repairs. This is a significant lifestyle advantage that doesn't show up in a purely financial calculation.
• The long-term, forced savings aspect of paying off a mortgage principal is a powerful wealth-building tool that renting does not provide. Every mortgage repayment increases your equity in the property.

• Use realistic figures for property value growth and interest rates. Overly optimistic assumptions can skew the results and lead to a poor decision.
• Don't forget to factor in the opportunity cost of your deposit. If you weren't buying a house, that money could be invested in shares or other assets, earning a return. This should be considered in your analysis.
• If you don't plan to stay in one location for at least 5-7 years, renting is often the more financially sensible option, as it's unlikely you'll have enough capital growth to cover the high transaction costs of buying and selling.