Renting vs buying calculator Australia

I would start with the home you could afford and the rent for a similar property. Comparing an $800k apartment with the rent on a much larger house can give you an answer that has little to do with your own choice.

Our home loan calculators can help you check the rest of your budget, including the deposit you would need.

Enter your rent, how often you pay it and the number of years you want to compare. Then add the purchase price, deposit and mortgage interest rate. Use a rate you could realistically qualify for, rather than assuming the pre-filled rate is an offer.

The result estimates the equity you would have if you bought and the invested balance you could have if you rented. It does not check whether a lender would approve the loan or whether the repayments fit your budget. A "Neutral" result means the projected gap is less than $10,000, rather than both balances being exactly equal.

The calculator holds several assumptions constant so you can make a simple comparison. You can change the mortgage rate and comparison period. The assumptions for property growth, rent increases, maintenance and investment returns stay fixed.

Weekly rent is multiplied by 52 and monthly rent by 12; annual rent is used as entered. The calculation then increases rent each year. Mortgage repayments stay at the rate you entered until the loan is repaid, even though a real variable rate can change and a fixed rate usually applies for only part of a loan term.

The 1% maintenance amount is a broad modelling allowance. It is not a quote for a particular building, and the tool does not separately price council rates, insurance, strata levies or major repairs. List those costs for the actual property before relying on the result.

A 5% investment return is an assumption, not a guaranteed or risk-free return. Returns, fees and tax depend on the investment you choose. Moneysmart's investing guide explains why your timeframe and tolerance for losses matter.

Suppose you are comparing $650 a week in rent with buying an $800k home using a $160k deposit. You borrow $640k over 30 years at an example rate of 6%.

The mortgage repayment is about $3,837 a month. Starting rent is about $2,817 a month when annualised. Buying also needs a maintenance allowance, so the monthly repayment alone understates the difference in your household budget.

Using the calculator's 4% property growth, 3% rent growth, 1% maintenance and 5% investment return assumptions gives these results. This is an example only, before omitted buying and selling costs and investment tax or fees.

Amounts are rounded separately, so subtracting the displayed figures can differ by $1. The investment balance assumes you invest the available savings from renting throughout the comparison. If you spend that difference, you will not finish with the balance shown.

After 10 years, the projected property value is about $1.18m and the remaining home loan is about $536k. The difference is your estimated equity. You would still need to sell or borrow against the property to access it, and the result has not deducted selling costs.

If buying finishes at least $10,000 ahead over your selected period, the calculator also shows the first year when projected home equity overtakes the renter's invested balance. A blank break-even result does not prove the balances never cross. Test a higher loan rate and a shorter stay to see how much the result depends on your plans. The result still leaves out buying and selling costs. If it is close, get those costs included before using the year to guide your decision.

The model puts buying ahead from year 1 in this example. That is a reason to check the missing costs carefully before acting. It does not establish that buying and reselling after 1 year would leave you better off.

Your deposit and the principal you repay help build your equity. Interest, maintenance and transaction costs have a different job: they pay for borrowing, owning and changing properties. Rent pays for somewhere to live, while leaving your deposit available for other uses.

Calling rent "dead money" skips that comparison. A buyer also has costs they will not recover, and a renter can build assets outside property.

Allow for transfer duty where it applies, conveyancing, title and mortgage registration, inspections, lender fees and lenders mortgage insurance where required. If you sell later, allow for agent fees, marketing, legal costs and any applicable loan exit or fixed-rate break costs.

Use our Queensland stamp duty calculator and LMI calculator as starting estimates for a Queensland purchase, then obtain figures for your state and loan. Moneysmart's home-buying checklist also separates the deposit from buying costs.

For an apartment, check the body corporate levies and building records. A low advertised levy tells you little about a special levy for major repairs.

Include rent increases, moving costs and the cash tied up in a rental bond. Check the lease terms and your state's tenancy rules rather than assuming you can move at any time without costs.

Putting your deposit into a home means giving up the chance to invest that money elsewhere. That forgone alternative is the opportunity cost. This calculator compares the home equity with investing your deposit and any savings from renting. The investment return is an assumption, and the outcome depends on whether you actually invest the money.

If renting leaves you with a monthly surplus, decide what you would actually do with it. The calculator assumes the surplus is invested. A separate savings plan makes that a deliberate choice rather than a theoretical benefit.

If you plan to buy before your lease ends, check what happens when you break a lease to buy a home.

The tool grows the invested balance each year and adds the annual savings after that year's investment growth. Where rent exceeds mortgage repayments plus maintenance, the model draws down the investment balance, to a minimum of zero. It does not model borrowing to fund a further shortfall or investing a buyer's surplus separately.

A smaller deposit can bring buying closer, but you still need to afford the loan. Under the Australian Government 5% Deposit Scheme, eligible buyers can apply through a participating lender with a minimum 5% deposit without LMI. Eligible single parents or legal guardians may qualify with a minimum 2% deposit.

There are no income caps or annual place limits. Property-price caps, ownership, residence, citizenship or permanent-residency requirements and lending conditions still apply.

The government guarantee is not cash towards the purchase and does not reduce your mortgage. A 5% deposit on an $800,000 home leaves a $760,000 loan before any financed costs. At an example rate of 6% over 30 years, principal and interest repayments would be $4,557 a month. That is about $720 more than the $3,837 repayment in the 20% deposit example above. A lender still needs to assess the application.

Use the deposit calculator to build a cash budget that includes purchase costs and a savings buffer. State duty concessions, grants and any LMI waiver need their own eligibility checks. Start with the first home buyer guide and the duty guidance for Queensland or NSW where relevant.

This rent vs buy calculator does not apply grants, duty concessions or government guarantees automatically. Enter the deposit you will actually contribute and obtain the remaining costs separately. Do not add the government guarantee to your deposit. When comparing loans, our Commonwealth Bank and NAB reviews explain features and policy questions to check. Confirm the current rate, fees and scheme participation for the loan you are considering.

Renting can suit you when you need flexibility, are still choosing where to live or want more time to build savings. Buying can suit you when you want a stable home, expect to stay for a reasonable period and can manage both the loan and ownership costs.

If buying looks workable, follow our step-by-step home-buying guide to plan the finance, inspections and settlement.

Owning gives you more control over your home, but renovations can still require council or body corporate approval. Renting generally leaves major property maintenance with the landlord, subject to your lease and tenancy law, but you have less control over the property and how long you can stay.

If rentvesting appeals to you, compare it separately. This calculator treats buying as purchasing the home you live in. It does not include rent received from tenants, an investment-property loan or investment-property tax.

Try a higher mortgage rate and a shorter comparison period. A model can show growing equity while the actual monthly repayments leave you with very little room to move.

I would set your comfortable repayment budget before choosing a maximum purchase price. Our home affordability guide explains the difference between what you might be able to borrow and what you can comfortably repay.

Property and investment returns will not arrive at a steady rate each year. The calculator does not let you change those growth assumptions, so arrange a fuller comparison if your decision depends on weaker property growth, different investment returns or a planned sale date.