What the two lines mean
Both lines are net cost — what the money actually cost you by the end of that year, assuming you sold up and walked away.
- Renting is every rent payment made so far, minus what your deposit grew to while it sat invested instead of buried in a house.
- Buying is the deposit, the closing costs and every monthly outgoing including maintenance — minus what you would clear on a sale after the agent takes their cut and the remaining loan is paid off.
Buying begins far behind, because you paid several per cent of the price simply to get in and will pay several more to get out. The line comes down as the loan amortises and the house appreciates. Where they cross is the answer.
The two costs other calculators skip
Selling costs. Five to six per cent of the sale price, and on a house that has appreciated, that is a larger number than it sounds. A comparison that ignores it is comparing a purchase you never exit.
The deposit's opportunity cost. If you rent, the deposit is still yours and still earning. Leaving that out is the single most common way these tools flatter buying — it silently treats the largest sum in the whole comparison as though it would otherwise sit in a drawer. Set that field to zero and watch the crossover jump forward; that gap is the assumption doing the work.
Try these before you trust the number
- Appreciation at 0%. If buying only wins on growth, you are making a bet on the market, not a housing decision.
- Your actual stay. Most people move well before thirty years. If the crossover is year twelve and you expect to move in five, the answer is rent.
- Rent growth at 0%. Rent rising faster than 3% is what drives most of buying's advantage in the long run.
What this does not include
- Tax deductions. Mortgage interest and property tax may be deductible depending on where you live and whether you itemise. That helps buying, and it is not modelled here because it depends on facts this page does not know.
- Rent controls, or a landlord who does not raise the rent. The rent growth figure is a straight annual increase.
- The reasons that are not financial — security of tenure, the freedom to paint a wall, the freedom to leave in a month. Those decide plenty of cases on their own, and no calculator settles them.
This is an estimate to think with, not financial advice.
Common questions
How long do you need to stay for buying to be worth it?
The usual rule of thumb is five to seven years, and it is only a rule of thumb. The real answer depends on your rate, your rent, and what the deposit could otherwise earn — which is what the plot above works out for your figures.
Is rent money thrown away?
No more than mortgage interest is. In the early years most of a mortgage payment is interest, and that money is as gone as rent. What buying builds is the principal share plus appreciation, less the cost of getting in and out.
What if prices fall?
Put a negative number in appreciation. The crossover moves out sharply or disappears, and that is the honest picture of the downside.